Seoul: Financial institutions' exposure to real estate development dropped sharply in the first quarter of the year as they struggled to write off or reduce loans extended to risky projects, data showed Tuesday.
According to Yonhap News Agency, data from the Financial Supervisory Service revealed that banks, insurers, and other financial institutions held 190.8 trillion won (US$141 billion) worth of real estate project financing (PF) loans as of March, marking a decrease of 11.5 trillion won from three months prior.
Of the total, risky real estate PF loans were tallied at 21.9 trillion won at the end of March, which accounted for 11.9 percent of the total loans. The delinquency ratio of real estate PF loans stood at 4.49 percent at the end of March, rising sharply by 1.07 percentage points compared to three months earlier.
Earlier, the watchdog indicated that over half of the risky PF loans, amounting to 12.6 trillion won, were expected to undergo restructuring by the end of June through sell-offs or recapitalization. PF loans have been a persistent issue in the financial market, as a rise in soured loans, which began in late 2023, was feared to affect financial institutions and the overall financial stability of the market.