South Korea's bank bad loans surge to 17.7 trillion won, highest in seven years

The Bank of Korea reported that non‑performing loans (NPLs) at domestic banks reached 17.7 trillion won as of March 2024, the largest level since March 2019. The increase is driven primarily by a sharp rise in delinquency among small and medium‑size enterprises (SMEs). The number of delinquent SME borrowers grew 2.6‑fold since 2016, while large‑corporate defaults fell.

Debt held by self‑employed individuals aged 60 and over also jumped dramatically, rising from 96 trillion won in 2015 to 405.7 trillion won in 2024 – a 4.2‑times increase over ten years. Banks are increasingly handing over distressed assets to specialist NPL firms rather than pursuing traditional restructuring. The central bank warned that continued high interest rates and weak earnings among SMEs could push bad‑loan volumes higher, posing a risk to financial stability.