The won loan arrears rate at domestic banks (loans with principal and interest in arrears for one month or more) turned upward after one month. The arrears rate on small and midsize business loans rose, pushing up the overall arrears rate.
According to the Financial Supervisory Service on the 18th, the won loan arrears rate at domestic banks stood at 0.61% at the end of April. It was up 0.05 percentage points from the end of the previous month (0.56%) and up 0.04 percentage points from a year earlier. The arrears rate at domestic banks edged down in March but turned higher again in April.
The rise in the arrears rate was because new arrears increased while the volume of resolved delinquent loans decreased. New arrears in April totaled 2.9 trillion won, up 200 billion won from the previous month. In contrast, the amount of resolved delinquent loans was 1.6 trillion won, down 2.7 trillion won from the previous month (4.3 trillion won). The new arrears rate was 0.12%, up 0.01 percentage points from the previous month.
At the end of April, the arrears rate on loans to corporations was 0.74%, up 0.06 percentage points from the end of the previous month. The arrears rate on loans to large corporations was 0.22%, holding roughly steady from the previous month. The arrears rate on loans to small and midsize enterprises was 0.90%, up 0.09 percentage points from the end of the previous month. Among them, the arrears rate for small corporate borrowers was 0.98%, up 0.10 percentage points from the previous month, and the arrears rate on loans to sole proprietors also rose 0.07 percentage points to 0.78%.
The arrears rate on household loans also inched up. At the end of April, the arrears rate on household loans was 0.42%, up 0.02 percentage points from the end of the previous month. The arrears rate on mortgage loan debt was 0.30%, up 0.01 percentage points from the previous month, and the arrears rate on household loans such as unsecured credit was 0.83%, up 0.07 percentage points from the previous month.
An official at the Financial Supervisory Service said, "High inflation and a strong dollar stemming from the Middle East situation are continuing, and internal and external economic uncertainties such as rising market interest rates remain," adding, "We plan to guide banks to bolster preemptive loss-absorbing capacity, including setting aside loan-loss provisions, and to support vulnerable borrowers at risk of arrears through banks' own debt restructuring."