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Banks' bad loan rate edge up in May

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(Globalpost/GlobalPost)

SEOUL, July 1 (Yonhap) -- The delinquency rate for loans extended by South Korean banks inched up in May from a month earlier, mainly due to a rise in the overdue rate of household loans, the financial regulator said Monday.

The loan delinquency rate of 18 local banks stood at 1.28 percent in May, up 0.03 percentage point from the previous month, according to the Financial Supervisory Service (FSS).

The bad loan rate for household lending gained 0.05 percentage point to 1.04 percent over the cited period, with the corresponding figure for corporate loans staying almost flat at 1.48 percent, the FSS said.

The on-month gain in the delinquency rate came as the amount of overdue loans extended to households increased, the regulator said. The delinquency rate of their credit loans, which refer to the debts held by households excluding home-backed loans, climbed 0.1 percentage point to 1.26 percent as of end-May.

The amount of fresh household loans grew by 2.6 trillion won (US$2.27 billion) on-month to an outstanding 463.2 trillion won as of end-May, as people opted to take out mortgages before the end of the acquisition tax cut on June 30, the FSS said.

The banks' outstanding amount of corporate loans reached 638.6 trillion won at the end of May, up 3.9 trillion won from the previous month, largely due to a growth in loans extended to small and medium enterprises (SMEs) in line with the government's policy.

SME lending totaled 474.1 trillion won as of end-May, up 2.8 trillion won from a month ago, according to the regulator.

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