S. Korean banks' bad loan ratio decreases in Q3

13:29, November 10, 2009      

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South Korean banks saw an on-quarter decline in their bad loan ratio during the third quarter as they cleared off problem loans, the nation's financial watchdog said Tuesday.

According to the Financial Supervisory Service (FSS), the nonperforming loan-to-total lending ratio of 18 local lenders stood at 1.48 percent as of end-September, down 0.03 percentage point from three months earlier.

The third-quarter decline was the first drop in the ratio in five quarters, the FSS said.

As of end-September, local lenders' problem loans amounted to 19.2 trillion won, or 16.7 billion U.S. dollars, down 400 billion (346 million U.S. dollars) from the previous quarter.

"The decline in the bat debt ratio came as the amount of fresh bad debts fell and local banks aggressively cleared off such problem loans last quarter," the watchdog said in a statement.

During the July-September period, local lenders cleared 6.2 trillion won, or 5.37 billion U.S. dollars, in bad loans, down from 7.3 trillion won, 6.3 billion U.S. dollars, during the previous quarter, it said.

However, the amount of disposal was sharply up from 2.5 trillion won, 2.2 billion U.S. dollars, during the same period last year, it added.

The country's financial watchdog advised local banks to continue to lower their bad loan ratio to around 1 percent by the end of this year.

Source: Xinhua
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