As the economic downturn and high interest rates intensify the management difficulties of small and medium-sized enterprises, the Industrial Bank of Korea will sell bad debts amounting to 700 billion won in the first half of this year alone. The bad debts of the Industrial Bank of Korea are increasing rapidly, surpassing the total of the four major commercial banks, including KB Kookmin, Shinhan, Hana, and Woori.
According to the financial sector on the 31st, the Industrial Bank of Korea has decided to sell bad debts worth 700 billion won in the first half of this year and is selecting a disposal agent. This amount is about 50 billion won more than 654.1 billion won during the same period last year. Last year, the Industrial Bank of Korea sold a total of 1.73 trillion won in bad debts.
Bad debts refer to debts that individuals or corporations fail to repay for more than three months. Banks either handle the final loss of bad debts or sell them on the market. The increase in bad debts at the Industrial Bank of Korea indicates that there are many small and medium-sized enterprises and small business owners who cannot repay loans.
In fact, the bad debts of the Industrial Bank of Korea are increasing rapidly. The amount of non-performing loans at the Industrial Bank of Korea was recorded at 4.197 trillion won at the end of last year, an increase of about 1 trillion won, or 31%, compared to the previous year's 3.191 trillion won. Non-performing loans are classified as debts that are overdue for more than three months.
The total of non-performing loans at the four major commercial banks, including Kookmin, Shinhan, Hana, and Woori, was 3.949 trillion won last year. The amount of non-performing loans at the Industrial Bank of Korea has surpassed the total of the four major banks. The rate of increase is about twice as fast compared to the four banks (16.6%).
As the management situation worsens due to the economic downturn, high interest rates, and high exchange rates, bad debts in the banking sector are generally increasing. However, the rate of increase in bad debts at the Industrial Bank of Korea, which primarily serves small and medium-sized enterprises and small business owners, is particularly fast.
The market expects the scale of bad debts at the Industrial Bank of Korea to increase further. This is due to the deepening global economic uncertainty stemming from the trade pressures of the Trump administration in the United States.
An executive at a bank noted, "Due to the internal economic downturn and high inflation, small business closures are particularly increasing, leading to a rapid rise in bad debts," and added, "There are concerns that if this trend continues, it could exceed manageable levels."