At the end of March this year, the won-denominated loan arrears ratio at domestic banks (based on principal and interest in arrears for one month or longer) was tallied at 0.56%. It fell 0.06 percentage points from the end of the previous month (0.62%) but rose 0.03 percentage points compared with the same period a year earlier (0.53%).
According to the Financial Supervisory Service on the 26th, newly occurring arrears in March amounted to 2.7 trillion won, down 300 billion won from the previous month (3 trillion won), while the volume of resolved arrears-backed claims reached 4.3 trillion won, a surge of 3 trillion won from the previous month (1.3 trillion won). As a result, the change in arrears-backed claims turned to a decrease of 1.6 trillion won. The new arrears ratio was 0.11%, down 0.01 percentage points from the previous month (0.12%) and also 0.01 percentage points lower than a year earlier (0.12%).
By institutional sector, the corporations loan arrears ratio was 0.68%, down 0.08 percentage points from the end of the previous month (0.76%) but up 0.06 percentage points from the end of the same month a year earlier (0.62%). The large corporations loan arrears ratio was 0.22%, up 0.03 percentage points from the previous month and 0.11 percentage points from a year earlier. In contrast, the small and midsize corporations loan arrears ratio was 0.81%, down 0.11 percentage points from the previous month. Among these, the small corporate arrears ratio was 0.88%, down 0.14 percentage points, and the sole proprietor loan arrears ratio was 0.71%, down 0.07 percentage points.
The household loans arrears ratio was 0.40%, down 0.05 percentage points from the end of the previous month (0.45%) and 0.01 percentage points lower than at the end of the same month a year earlier (0.41%). The mortgage loan arrears ratio was 0.29%, down 0.02 percentage points from the previous month, and the arrears ratio for household loans excluding mortgages, such as unsecured credit, was 0.76%, down 0.14 percentage points from the previous month (0.90%).
The Financial Supervisory Service (FSS) said the March decline in the arrears ratio largely reflected the expanded resolution of arrears-backed claims at the end of the quarter, while internal and external risk factors, including the Middle East situation, continue. Accordingly, the banking sector will be guided to strengthen soundness management by stepping up write-offs and sales of nonperforming loans and increasing loan-loss provisions, while for vulnerable borrowers with a high risk of arrears, the plan is to activate debt restructuring to prevent the spread of insolvencies.