S Korea reports significant decline in banks' loan delinquency ratio in December

19:11, January 21, 2010      

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South Korean banks saw a sharp decline in the loan delinquency ratio in December 2009 on the back of lenders' massive write-offs, the financial watchdog said Thursday.

According to the Financial Supervisory Service (FSS), the delinquency ratio of loans extended by domestic banks posted 0.76 percent in December, slipping under 1.0 percent-level for the first time since October 2008 and hitting near a two-year low

The figure also was a 0.34 percentage point drop from 1.10 percent tallied for a month earlier, the FSS said.

The loan delinquency ratio, which had been on an upward move since September 2008, made a downturn in March 2009, approaching the pre-crisis level of 0.74 percent, the FSS added.

While the delinquency ratio for corporate loans hit 1.05 percent during the same period, freefalling from 1.55 percent in November, the household loan delinquency ratio fell by 0.13 percentage point month-on-month to 0.42 percent, according to the watchdog.

The drop in the household loan delinquency ratio came as the figure for mortgage loans dropped by 0.07 percentage points to 0. 33 percent, the FSS said.

The decline in the overall ratio, meanwhile, was attributed to lenders' large-scale write-offs and dispositions as well as normalization of delinquent loans ahead of year-end account settlements, the financial regulator explained.

The data came as the South Korean financial markets have been showing signs of recovery, with the head of the central bank hinting at a possible easing down of monetary policies.

Source: Xinhua
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