Bank loan defaults rise on business slump

SEOUL, April 15 (Yonhap) -- Defaults by local companies and households on bank
loans climbed in March as more smaller firms failed to service debt due to a
slumping economy, the financial watchdog said Wednesday.

The overall delinquency rate of bank loans came in at 1.46 percent as of the end
of March, up 0.55 percentage point from a year earlier, according to the
Financial Supervisory Service.
But the growth of the delinquency ratio edged down from a month earlier as local
banks tried to make their end-quarter balance sheets cleaner, it said. The
on-year gain in March contrasted with a 0.66 percentage point rise in February.
The watchdog attributed the gain to more defaults by small and medium-sized
enterprises (SMEs) struggling to secure cash amid deteriorating business
conditions.
The default rate of bank loans to SMEs stood at 2.32 percent in March, up from
1.29 percent a year earlier, the watchdog said.
The data comes as the South Korean economy shrank 5.1 percent in the fourth
quarter from three months earlier, buffeted by tumbling exports and weak domestic
demand. The central bank predicted that Asia's fourth-largest economy will
contract 2.4 percent this year.
sooyeon@yna.co.kr
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