The South Korea Financial Supervisory Service published its December 2025 snapshot of domestic banks’ loans classified as substandard or below (SBLs), showing the system-wide SBL ratio unchanged at 0.57% from three months earlier but 0.03 percentage points higher than a year earlier. SBL balances rose to KRW 16.6 trillion while provisioning and coverage indicators declined. SBLs comprised KRW 13.2 trillion of business loans, KRW 3.1 trillion of household loans and KRW 0.3 trillion of credit card receivables and loans. Total provisions for bad debts fell to KRW 26.7 trillion (from KRW 27.1 trillion at end-September), taking the NPL coverage ratio to 160.3% (down 4.5 percentage points quarter on quarter and 26.7 percentage points year on year). By loan type, business-loan SBL ratios eased to 0.70% with a rise for large companies to 0.49% and a decline for SMEs to 0.83%; household loans increased to 0.31% (mortgages 0.21%, unsecured 0.64%), while credit card receivables and loans fell to 1.84%. New SBLs in the fourth quarter of 2025 totalled KRW 5.9 trillion and resolved SBLs totalled KRW 5.7 trillion, including KRW 4.1 trillion in write-offs and loan sales.
South Korea Financial Supervisory Service 2026-03-25
South Korea Financial Supervisory Service reports domestic banks’ substandard-or-below loan ratio steady at 0.57% as coverage ratio falls to 160.3%
The South Korea Financial Supervisory Service reported that domestic banks’ substandard or below loan ratio was stable at 0.57% in December 2025, with balances rising to KRW 16.6 trillion and provisioning and coverage indicators weakening. Total provisions for bad debts fell to KRW 26.7 trillion, reducing the non-performing loan coverage ratio to 160.3%, while new substandard or below loans of KRW 5.9 trillion were broadly offset by KRW 5.7 trillion in resolutions in the fourth quarter of 2025.