How much did risky real estate PF loans decrease by the end of June?

Risky real estate project-finance loans declined to 15.1 trillion won at the end of June from 16.4 trillion won at the end of March, a reduction of 1.3 trillion won.

Why have risky real estate PF loans raised concerns about South Korea’s financial stability?

Soured PF loans began increasing in late 2023, creating concern that losses could harm financial institutions and weaken overall financial stability in the market.

Risky PF loans fall in Q2: watchdog

Q: How are South Korean financial institutions reducing risky PF loans?

Financial institutions reduced their exposure through sell-offs or recapitalization. The Financial Supervisory Service said the remaining risky PF loans will also be restructured.

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Summary

Risky real estate project-finance loans fell in the second quarter through sell-offs or recapitalization, the Financial Supervisory Service said Tuesday. Loans classified as risky totaled 15.1 trillion won at the end of June, down from 16.4 trillion won at the end of March. The remaining risky PF loans will also be restructured.

Key Facts

Risky PF loans represented 9 percent of financial institutions’ 168.8 trillion won in total real estate development exposure at the end of June.
The risky-loan share fell from 9.6 percent at the end of March last year, when total exposure stood at 169.8 trillion won.
The FSS said rising soured PF loans since late 2023 had raised concerns about financial institutions and overall market stability.

By Yonhap

Published Oct 13, 2026 12:20 pm KST

The Financial Supervisory Service headquarters in Seoul / Korea Times file

Outstanding loans extended to risky real estate development projects fell in the second quarter of the year via sell-offs or recapitalization, the financial watchdog said Tuesday.

According to the Financial Supervisory Service (FSS), 15.1 trillion won (US$11.3 billion) in loans extended to real estate projects were classified as risky at the end of June.

The reading marks a drop from 16.4 trillion won at the end of March.

The end-June figure accounted for 9 percent of total exposure by financial institutions to real estate development at 168.8 trillion won, which also marks a drop from 9.6 percent at the end of March last year and 169.8 trillion won, respectively.

The remaining risky PF loans will be restructured as well, the watchdog said.

PF loans have been one of the sticky issues in the financial market as a rise in soured loans, which started in late 2023, was feared to hurt financial institutions and the overall financial stability in the market.

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