Delinquency of bank loans to big firms jumps in June

The delinquency rate for South Korean bank loans to large companies soared in June from the previous month due mainly to a one-off factor, data showed Monday.

Local banks saw the delinquency rate of their lending to big businesses stand at 2.17 percent at the end of June, up 0.81 percentage point from a month earlier, according to the data by the Financial Supervisory Service. From a year earlier, the figure was up 1.49 percentage points.

Loans are considered delinquent when payment of both principal and interest is overdue for one month or longer.

The delinquency rate for June was much higher than usual as it typically hovers in the 1 percent range, and the financial watchdog attributed the surge to the financial crunch of a major shipbuilder.

In early June, a Seoul court approved a court-led restructuring scheme for financially troubled STX Offshore & Shipbuilding Co., South Korea's No. 4 shipyard. Creditors of STX Shipbuilding have 5.5 trillion won ($4.9 billion) in financial exposure to the shipyard, with the state-run Korea Development Bank taking the largest amount of 3 trillion won.

The FSS said STX shipbuilding's court receivership raised the delinquency rate by an additional 1.4 percentage points for June.

The delinquency rate for household loans, on the other hand, dropped 0.06 point to 0.31 percent in June, with the figure for small and medium enterprises coming to 0.71 percent, down 0.24 point from the previous month.

Excluding home-backed loans, the overall delinquency rate for bank lending to households came in at 0.48 percent in June, down 0.13 point from May, according to the data. (Yonhap)