By Kang Seung-woo
State-run lenders Korea Development Bank (KDB) and Woori Bank, and Suhyup Bank reported the highest bad-loan ratios among major lenders in the third quarter, which were well above the average of 18 domestic banks, the financial watchdog said Wednesday.
According to the latest figures from the Financial Supervisory Service (FSS), Suhyup, or the National Federation of Fisheries Cooperatives, posted a non-performing loan (NPL) ratio of 2.41 percent in the July-to-September period, followed by KDB and Woori, which registered 2.36 percent and 2.25 percent. The bad-loan ratio refers to the portion of loans overdue for more than three months.
The average NPL ratio for Korean banks came to 1.66 percent as of the end of September, down 0.07 percentage points from the previous quarter.
Among seven commercial banks, Kookmin came in second at 1.88 percent behind Woori and Korea Exchange Bank (KEB) sat at 1.29 percent; while Shinhan and Hana logged 1.24 percent and 1.15 percent, respectively.
Among six regional banks, Jeju Bank, an affiliate of Shinhan Financial, put up the highest number of 2.52 percent, but its total loans was just 2.3 trillion won in the third quarter, compared with 176.6 trillion won by Woori.
Along with KDB, Woori and Suhyup, the National Agricultural Cooperative Federation, better known as Nonghyup, also cracked the 2 percent NPL ratio with 2.08 percent.
Entering this year, the banking industry’s bad-loan NPL ratios have been falling following the FSS order for them to clean up their balance sheets, as new delinquent loans tallied 5.4 trillion won, down from the previous quarter’s 6.2 trillion won and far below 9.7 trillion won recorded a year ago.
However, they still hovered above the pre-crisis level of 3.5 trillion won, a quarterly average in 2008.
The FSS said that the fall in the ratio came mainly because 5.5 trillion won in sour loans were resolved through write-offs, sales and disposal of collateral.
New bad loans totaled 5.4 trillion won in the third quarter, with 3.9 trillion won, or 71.5 percent, coming from corporate loans. Household and credit card advances represented 1.4 trillion won and 0.2 trillion apiece.
“To enhance domestic banks’ asset quality and ability to absorb losses, the FSS will strengthen the supervision of banks with a focus on early detection of potential bad debt, including project financing (PF) loans,” an FSS official said.
“In addition, we will continue to encourage domestic banks to reduce delinquent loans to meet the target ratio of 1.5 percent by the end of 2011.”