Bank of Korea warns of rising risks for vulnerable firms and self-employed

The Bank of Korea has warned that while rising interest rates help mitigate financial imbalances such as household debt and rising housing prices in the Seoul metropolitan area, they pose significant risks to vulnerable sectors.

Data released on September 22 indicates that the proportion of marginal firms—those unable to cover interest expenses with operating profits for three consecutive years—has reached 19.1% of all externally audited companies. This is the highest level recorded since the Bank of Korea began compiling this statistic 16 years ago. The increase is particularly pronounced in sectors such as real estate, metal products, and petrochemicals.

In addition to corporate risks, the self-employed sector is facing mounting pressure. The delinquency rate for vulnerable self-employed borrowers has reached 12.71%. While the household debt-to-GDP ratio has shown signs of improvement, the Bank of Korea maintains that a strict management stance is necessary due to risks from sustained real estate price increases and varying income improvement levels across different sectors.