South Korean banks face surge in non‑mortgage credit loans and rising delinquency rates

Data from the Financial Supervisory Service shows that the five major South Korean banks – KB Kookmin, Shinhan, Hana, Woori and NH Agricultural – have extended other‑loan products (credit loans, cash‑overdraft accounts and deposit‑backed loans) to a total that exceeds their combined target by roughly 2.4 trillion won, about 3.2 times the set goal. While mortgage lending has been tightened – with some banks halving loan limits – the growth of non‑mortgage credit has driven overall household‑loan volumes beyond planned levels. Lawmaker Lee Yang‑soo warned that “the tightening of mortgage loans is effectively cutting off financing for ordinary borrowers” and called for regulators to introduce measures that minimise harm to real‑economy demand.

At the same time, the overall loan delinquency rate rose to 0.67% at the end of May, the highest level in nine and a half years. New delinquent amounts totalled 3.3 trillion won, up 4 trillion won from the previous month. Corporate delinquency stood at 0.84%, while household delinquency reached 0.45%. Regulators said the upward trend reflects higher credit expansion and rising interest‑rate pressures, and urged banks to strengthen risk‑management, expand loss‑absorbing capacity and tighten credit‑risk controls.