Bad loans in South Korean banks reduce on year-end write-offs

Bad loan in South Korean banks reduced last month as lenders wrote off bad debts ahead of the year-end book closure, financial watchdog data showed Tuesday. The ratio of bad loans overdue more than one day for banks was 0.88 percent as of the end of December, down 0.22 percentage points from a month earlier, according to the Financial Supervisory Service (FSS). Local banks cleared massive overdue loans worth 5 trillion won (4.64 billion U.S. dollars), up from 1.6 trillion won a month earlier, ahead of the year-end book closure. Overdue loans outstanding reduced to 10.2 trillion won as of end-December from 12.9 trillion won the prior month. The delinquency ratio for corporate loans fell to 1.06 percent at the end of December from 1.28 percent a month ago, and the figure for household loans declined from 0.87 percent to 0.66 percent over the same period Outstanding loans denominated in the local currency came in at 1,162.8 trillion won as of end-December, down 0.7 percent from the previous month. Household loans continued to rise, but companies repaid massive debts to manage their debt ratios at the end of the year, the watchdog said. For the whole year of 2013, the bad loan ratio began to go downward from the second half of last year due to improved debt- repayment capabilities of both households and companies, according to the FSS.