Korean banks' delinquency rate for both household and business loans rose in July from a month earlier amid a deepening economic slump, the financial regulator said Thursday.
The loan delinquency rate of 18 local banks stood at 1.36 percent, up 0.27 percentage points compared with the previous month, according to the Financial Supervisory Service (FSS).
The corresponding figure for households climbed 0.1 percentage point to 0.93 percent, with that of business loans gaining 0.41 percentage points to 1.73 percent in the cited period.
The loan default rate excludes foreign lenders operating here and is based only on the won-denominated debts and trust accounts.
The on-month rise came as local households and companies have been behind with their debt repayments, the FSS said. Falling demand in the property market has brought down housing prices, making it harder for households to pay their mortgage interest or principal, while local firms have been hit by a global slowdown.
The loan delinquency rate for large enterprises jumped 0.83 percentage points on-month to 1.63 percent last month, as Sungdong Shipbuilding & Marine Engineering Co., a local shipbuilder, fell behind in payments worth 1.2 trillion won, according to industry sources. The firm is in dispute with its creditors over fresh cash injection.
The default rate on loans extended to shipbuilding and property industries, which are vulnerable to economic jolts, increased, the regulator said. Households' delinquency rate on mortgage loans as well as credit purchases also moved up over the cited period, it said.
Banks' outstanding loans reached 1,091 trillion won ($962.4 billion) as of end-July, up 1.3 trillion won, or 0.12 percent from a month earlier.
The total outstanding amount of household loans reached 455.4 trillion won last month, up 700 billion from June, with that of business loans coming in at 308.5 trillion won as of end-July, up 400 billion won compared with the previous month.
Loans extended to companies increased 2.6 trillion won in July from the prior month, while households increased their mortgage debts by 400 billion won over the cited period, according to the FSS. (Yonhap)