South Korean banks face record 1.2 trillion‑won loan losses as jeonse rates top 6%

Five major South Korean banks—KB Kookmin, Shinhan, Hana, Woori and NH Agricultural—reported estimated loss loans (non‑performing) of 1.21 trillion won for Q2 2024, the highest level in seven years and up 26 % from the same period a year earlier. Corporate loan losses approached 1 trillion won, while household loan losses rose 28 % to 2.3 trillion won. Watch‑list (high‑risk) loans also increased 5.7 % year‑on‑year to 10.2 trillion won.

At the same time, interest rates on jeonse (rental‑deposit) loans have surged, breaking the 6 % annual mark. A borrower with a 250 million‑won jeonse loan now pays about 125,000 won in monthly interest, up from 100,000 won. Fixed‑rate mortgage rates are edging toward 8 % and could reach that level by year‑end as market rates for bank bonds and the KOPIX benchmark continue to rise. The tightening follows higher U.S. Federal Reserve rates and a more restrictive stance by the Bank of Korea, prompting regulators to consider additional measures on housing‑related credit.