The South Korea Financial Supervisory Service published March 2026 data on domestic banks’ substandard or below loans, showing a modest deterioration in asset quality. The ratio of substandard or below loans to total outstanding loans rose to 0.60% at end-March 2026 from 0.57% at end-December 2025 and 0.59% a year earlier, while the stock of these loans increased by KRW1.1 trillion to KRW17.7 trillion. Business loans remained the main source of problem assets at KRW14.2 trillion, and their substandard or below loan ratio rose to 0.74% from 0.70%, led by SMEs at 0.88%. Household substandard or below loans increased to KRW3.3 trillion and the household loan ratio edged up to 0.32%, with mortgages at 0.22% and unsecured loans at 0.66%, while the ratio for credit card receivables and loans fell to 1.82% from 1.84%. In the first quarter of 2026, new substandard or below loans totaled KRW5.5 trillion against KRW4.4 trillion resolved. With total provisions for bad debts unchanged at KRW26.7 trillion, the NPL coverage ratio fell to 150.4% from 160.3% three months earlier and 170.5% a year earlier.
South Korea Financial Supervisory Service2026-05-29
South Korea Financial Supervisory Service reports domestic banks' substandard or below loan ratio rose to 0.60 percent in March 2026
The South Korea Financial Supervisory Service reported a modest deterioration in domestic banks’ asset quality in March 2026, with the ratio of substandard or below loans rising to 0.60% and their stock increasing to KRW17.7 trillion. Business loans, particularly to small and medium-sized enterprises, remained the main source of problem assets, while household loan quality also weakened. With provisions unchanged at KRW26.7 trillion, the non-performing loan coverage ratio declined to 150.4% from 160.3% at end-December 2025.