IBK Industrial Bank of Korea SME loan instability

IBK Industrial Bank of Korea is facing significant financial challenges related to its small and medium-sized enterprise (SME) loan portfolio and rising delinquency rates.

Investigations have revealed that the bank lent over 157.2 billion won to approximately 249 companies linked to suspected fraudulent technology credit rating (TCB) reports over a seven-year period. Police are investigating 312 instances of suspected false evaluations. As of July 2026, the outstanding loan balance for these suspicious evaluations was 72.8 billion won, with 17 companies having already defaulted, causing 4.7 billion won in losses. Data indicates that 67.4% of these loans were issued to companies evaluated by eCredible. Other involved agencies include Korea Rating & Data, SCI Evaluation Information, and NICE Information Service. IBK also identified 214 cases of evaluation errors requiring grade changes between 2022 and August 2026.

Compounding these issues, long-term delinquency in SME loans has surged. As of July 2026, loans overdue by more than one year reached 567.8 billion won, a sixfold increase from the 94.2 billion won recorded at the end of 2022. The number of long-term delinquent borrowers rose from 237 companies in late 2022 to 1,908 companies by July. Total SME loan delinquencies reached 2.959 trillion won in July, nearly four times the amount from late 2022.

By the end of the third quarter, the bank’s corporate delinquency rate rose to 1.10%, the highest level since March 2009. This increase is primarily driven by the construction, real estate, and rental sectors, with the latter reaching a 15-year high delinquency rate of 1.99%.