The South Korea Financial Supervisory Service reported that domestic banks’ loans classified as substandard or below rose to KRW 18.9 trillion at the end of June 2026 from KRW 17.7 trillion three months earlier. The ratio to total loans increased to 0.63%, up 0.03 percentage points quarter on quarter and 0.04 percentage points year on year. Although provisions for bad debts edged up to KRW 26.9 trillion, the nonperforming loan coverage ratio fell to 142.9% from 150.4% in March and 165.5% a year earlier. New substandard-or-below loans reached KRW 7.2 trillion in the second quarter, exceeding KRW 6.1 trillion of resolved loans. Business loans accounted for KRW 15.2 trillion of the outstanding total and KRW 5.7 trillion of new problem loans. The business-loan ratio rose to 0.77%, including 0.92% for small and midsize enterprises, while the household-loan ratio increased to 0.33% and the ratio for credit card receivables and loans reached 1.88%.
2026-09-02South Korea Financial Supervisory Service
South Korea Financial Supervisory Service reports substandard bank loans rising to KRW 18.9 trillion, coverage ratio falling to 142.9%
The South Korea Financial Supervisory Service reported that domestic banks’ substandard-or-below loans rose to KRW 18.9 trillion, or 0.63% of total loans, at the end of June 2026. The nonperforming loan coverage ratio fell to 142.9% as new problem loans exceeded resolutions during the second quarter.