Major banks offloaded over 3.2 trillion won ($2.3 billion) in bad debts during the first quarter of this year, data showed Sunday. This move is seen as an effort by major banks to manage their financial stability, as households and businesses struggle to meet their debt obligations due to high interest rates and an ongoing economic recession.
Five major banks — KB, Shinhan, Hana, Woori and NH Nonghyup Bank — wrote off around 3.27 trillion won worth of bad debts during the first 추천 half of 2024, according to data obtained from the lenders. The figure is up 1.5 times compared to the same period of last year.
Banks classify loans that are more than three months overdue as being unlikely to be recovered and either write them off their books or sell them at a steep discount to asset management companies.
The amount of such loans written off by banks surged from 2.3 trillion won in 2022 to 5.4 trillion last year and continues to rise this year.
One major reason is the increasing number of borrowers who are unable to repay their loans due to high interest rates.
“The loan delinquency rate has reached the highest level since 2019, prior to the COVID-19 pandemic,” an official at a major bank said. “Amid persistently high inflation and interest rates, domestic demand has not recovered, resulting in an increased debt burden for both households and businesses.”
The recent recovery of the housing market, coupled with an increase in policy loans aimed at assisting low-income households, has also pushed up the amount of loans.