Bad debt ratio falls sharply at local banks

SEOUL, Jan. 31 (Yonhap) -- Bad debts at South Korea's banks declined sharply in
December from six months earlier as lenders doubled their sell-offs of troubled
loans in a bid to clear balance sheets, the nation's financial regulator said
Sunday.
Non-performing loans at 18 local banks reached 15.7 trillion won (US$13.6
billion), or 1.22 percent of their total lending, at the end of December,
according to the Financial Services Commission (FSC).
The rate was down 0.29 percentage point from end-June when the figure soared to a
multi-year high of 1.51 percent. A non-performing loan is a loan that is in
default for over three months.
"Local banks wrote off 29.7 trillion won of bad debts in 2009, more than doubling
their disposals from 14 trillion won the previous year," the FSC said in a
statement.
Without the unexpected debt restructuring by units of Kumho Asiana Group,
however, the banks' non-performing loan ratio could have fallen to 0.99 percent,
the watchdog said, noting 1 percent is the level recommended by the FSC for the
banks.
Bad debts stemming from Kumho Asiana rose to 3 trillion won at the end of last
year, prodding its creditors to reschedule its debts.
The bad debt ratio on lending extended to small and medium-sized companies
declined to 1.82 percent at the end of December after staying above the 2 percent
level for the previous three quarters.
The comparable rate on household lending also decreased to 0.48 percent from 0.64
percent logged at the end of June, marking the lowest level since the watchdog
first compiled the data in March 2002, it said.
pbr@yna.co.kr
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