The Financial Supervisory Service said on the 20th that as of the end of January this year, the won-denominated loan arrears ratio at domestic banks (based on principal and interest in arrears for one month or more) was tallied at 0.56%. That was up 0.06 percentage points from the end of the previous month (0.50%).
During the same period, an increase in new arrears and a sharp decrease in the scale of resolving arrears-backed claims drove the rise in the arrears ratio. New arrears in January totaled 2.8 trillion won, up 400 billion won from the previous month (2.4 trillion won). In contrast, the scale of resolving arrears-backed claims was 1.3 trillion won, down 3.8 trillion won from the previous month (5.1 trillion won). As a result, the net change in arrears-backed claims showed an increase of 1.5 trillion won.
The new arrears ratio also inched up. In January, the new arrears ratio was 0.11%, up 0.01 percentage points from the previous month (0.10%), while remaining similar to the same month a year earlier. By institutional sector, the arrears ratio for loans to corporations was 0.67%, up 0.08 percentage points from the end of the previous month (0.59%). The arrears ratio for loans to large corporations was 0.13%, up 0.01 percentage points from the end of the previous month (0.12%), and up 0.08 percentage points from a year earlier.
The arrears ratio for loans to small and midsize companies was 0.82%, up 0.10 percentage points from the end of the previous month (0.72%). Of that, small and midsize corporations were at 0.89%, up 0.11 percentage points, and loans to sole proprietors were at 0.71%, up 0.08 percentage points.
The household loans arrears ratio also showed an upward trend. As of the end of January, it was 0.42%, up 0.04 percentage points from the end of the previous month (0.38%), but down 0.01 percentage points from a year earlier. The mortgage loan arrears ratio was 0.29%, up 0.02 percentage points from the end of the previous month, while credit loans and other loans excluding mortgage loans were 0.84%, up 0.09 percentage points.
The Financial Supervisory Service cited an increase in new arrears-backed claims and a decrease in the scale of resolving arrears-backed claims as the main reasons for the rise in the January arrears ratio. It also said it will continue to review banks' asset soundness, focusing on vulnerable industries, in light of expanding domestic and external economic uncertainty, including the Middle East situation.