S. Korean banks' default rate for corporate loans rises

SEOUL, Jan. 22 (Yonhap) -- South Korean companies' ability to repay debts
deteriorated in December as the global economic recession and a credit crunch
aggravated the financial difficulties of smaller firms, the financial watchdog
said Thursday.

Local banks' delinquency ratio of Korean currency-based corporate loans reached
1.46 percent as of the end of December, up from 1.3 percent from three months
earlier, according to the Financial Supervisory Service.
The loan default rate by small and medium enterprises (SMEs) came in at 1.7
percent as of end-December, up from 1.5 percent from the end of September as they
felt the pinch amid deteriorating external conditions, the watchdog said.
Meanwhile, local lenders' total default rate for won-based corporate and
household loans stood at 1.08 percent at the end of last year, up 0.11 percentage
point from three months earlier, it added.
The data came as South Korea's smaller companies are suffering from a cash
shortage as banks have become increasingly reluctant to extend loans amid the
global financial turmoil.
"There is a possibility that local banks' financial health may be hurt as the
default rate for SME loans is on the rise. The watchdog plans to beef up its
monitoring of bank lending to smaller firms," it added.
sooyeon@yna.co.kr
(END)