S Korean banks report decline in bad loans in 2009

South Korean banks saw a significant decline in bad loans as of end-December 2009, with its bad loan ratio hovering below the target level of one percent excluding the unexpected 3.0 trillion won debt obligations of Kumho Asiana Group, the nation's financial watchdog said Monday.

According to the preliminary data released by Financial Supervisory Service (FSS), South Korean lenders lowered their average bad loan ratio to 0.99 percent by the end of 2009, with the sudden workout of Kumho coming too late to affect the overall ratio.

Even if the troubled conglomerate's debt obligations were included, the ratio would climb to 1.22 percent on average, still 0.29 percentage-point lower than the figure marked at the end of June 2009, the data showed.

In terms of amount, bad loans amounted to 15.7 trillion won (13. 4 billion U.S. dollars), down 3.9 trillion won (3.3 billion U.S. dollars), or 19.9 percent, from 19.6 trillion won (16.8 billion U. S. dollars) tallied at end-June, the data said.

By class, the bad-loan ratio of both corporate and household loans each fell by 0.33 and 0.16 percentage points to 1.58 percent and 0.48 percent, respectively, during the second half of 2009, the FSS said.

The data came as domestic banks strived to lower the ratio with the support of the watchdog, according to the FSS.

In 2009, South Korean banks resolved 29.7 trillion-won (25.4 billion-U.S. dollar) worth bad loans through write-offs, collateral disposition, normalization, loan sales, and securitization, double the amount resolved in the preceding year, the FSS added.

Source: Xinhua