The implementation of the credit review modernization guidelines is one week away on the 25th, but the lending facilities of commercial banks remain mostly quiet. The photo shows an empty lending window of a commercial bank on Taepyeong-ro in Jung-gu, Seoul on the afternoon of the 25th./Courtesy of [source].

The non-performing loans (substandard loans) in domestic banks exceeded 16 trillion won, reaching the highest level in 5 years and 6 months.

According to the 'March 2025 status of non-performing loans in domestic banks' data released on the 30th by the Financial Supervisory Service, the non-performing loans in domestic banks were estimated at 16.6 trillion won.

This is the highest level since the third quarter of 2019 (16.8 trillion won). Non-performing loans refer to debts for which principal or interest repayment has been overdue for more than three months. Compared to the fourth quarter of last year, the banks' non-performing loans increased by 1.6 trillion won.

During this period, the non-performing loan ratio rose to 0.59%, an increase of 0.05 percentage points compared to the end of the previous quarter (0.54%). Compared to the same period last year (0.50%), it increased by 0.09 percentage points. The non-performing loan ratio also reached its highest level in four years since the end of March 2021 (0.62%).

In the first quarter, newly occurring non-performing loans amounted to 6 trillion won, decreasing by 100 billion won compared to the previous quarter. The amount of non-performing loan disposal was 4.4 trillion won, down by 1.1 trillion won from the previous quarter.

By sector, the amounts were as follows: corporate loans (11.7 trillion won), household loans (2.8 trillion won), and credit card receivables (300 billion won). The non-performing loan ratio for corporate loans (0.72%) increased by 0.06 percentage points compared to the end of the previous quarter. The non-performing loan ratio for large corporate loans rose to 0.45%, an increase of 0.03 percentage points compared to the end of the previous quarter, while small and medium-sized enterprise loans rose to 0.89%, an increase of 0.09 percentage points during the same period. The non-performing loan ratio for household loans was 0.32%, also up by 0.03 percentage points during the same period.

An FSS official noted, "In response to domestic and external uncertainties, we plan to strengthen asset soundness management by guiding measures like the purchase and sales of non-performing loans, while continually inducing the expansion of loss absorption capacity, such as increasing the reserves for bad debts."