At the end of Oct., the won loan arrears rate at domestic banks rose 0.07 percentage points from the previous month. As arrears rates on small and midsize enterprise loans and unsecured credit loans increased by about 0.10 percentage points, the overall loan arrears rate climbed.
According to the Financial Supervisory Service on the 26th, the won loan arrears rate at domestic banks at the end of Oct. (based on principal and interest in arrears for one month or more) was 0.58%, up 0.07 percentage points from the end of the previous month. However, it was lower than at the end of Aug. (0.61%).
New arrears generated in Oct. totaled 2.9 trillion won, up 400 billion won from the previous month. The amount of resolved arrears claims was 1.3 trillion won, down 3.5 trillion won from the previous month.
By loan institutional sector, the arrears rate on corporations loans was 0.69%, up 0.08 percentage points from the end of the previous month. Compared with the end of the same month a year earlier (0.56%), it rose 0.13 percentage points. The arrears rate on large-corporation loans was 0.14%, up 0.02 percentage points from the previous month, and the arrears rate on small and midsize enterprise loans was 0.84%, up 0.09 percentage points.
The household loans arrears rate (0.42%) rose 0.03 percentage points from the end of the previous month. The mortgage loan arrears rate (0.29%) was up 0.02 percentage points from the end of the previous month, and the arrears rate on household loans excluding mortgage loans, such as unsecured credit loans (0.85%), rose 0.10 percentage points.
An Financial Supervisory Service (FSS) official said, "We will guide banks to maintain sufficient loss-absorbing capacity by using methods such as selling back nonperforming loans and increasing provision, in preparation for the possibility of an expansion in arrears and delinquencies."