Seoul: South Korea's banks, insurers, card firms, and savings banks are experiencing a continued rise in bad loans amid an economic slowdown and delayed clearance of real estate-related loans, data showed Monday.
According to Yonhap News Agency, data compiled by the Financial Supervisory Service (FSS) and submitted to Rep. Kang Min-kuk revealed that bad loans stood at 23.8 trillion won (US$16.6 billion) as of end-January, up from 20.6 trillion won a month earlier. This marks a steady increase from 10.5 trillion won at the end of 2022 and 16.9 trillion won at the end of 2023.
Banks reported an increase in bad loans to 12.7 trillion won as of the end of January from 10.6 trillion won a month earlier. Similarly, savings banks' soured loans rose to 9.1 trillion won from 8.3 trillion won over the same period. This amount has more than tripled from 2.5 trillion won recorded three years earlier at the end of 2021, highlighting the growing financial strain within the sector.
The rise in bad loans is attributed to delays in the clearance of real estate-related loans, coupled with a prolonged economic downturn and increasing uncertainties. Credit card firms also saw a surge in bad loans, which increased to 1.5 trillion won as of the end of last month, up from 1.3 trillion won at the end of last year. Insurers experienced a rise in bad loans to 500 billion won from 400 billion won over the same period, according to the data.