Industrial Bank of Korea corporate delinquency rate hits 17-year high

The Industrial Bank of Korea (IBK) has reported its highest corporate loan delinquency rate in approximately 17 years. As of the end of the third quarter, the corporate delinquency rate rose to 1.10%, up from 0.98% in the previous quarter. This marks the highest level since March 2009.

The increase is primarily driven by the construction, real estate, and rental sectors. Delinquency rates in the real estate and rental industry surged to 1.99%, the highest level in about 15 years. This trend is attributed to the downturn in the real estate market, rising construction costs, and the accumulation of unsold properties, alongside the challenges posed by project financing (PF) instabilities.

While corporate delinquency rates have climbed, household loan delinquency rates saw a slight decrease from 0.53% to 0.50% during the same period. IBK faces the dual challenge of managing rising risks in vulnerable sectors while continuing to provide policy financing to innovative and high-growth industries amid high interest rates.