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THE INVESTOR] South Korean banks suffered huge losses in the second quarter, largely due to financing the ailing shipping and shipbuilding industries.
The combined net loss of 17 commercial and state-run banks stood at 400 billion won (US$356.69 million) from April-June period, compared to a net profit of 2.2 trillion won in the same period last year, according to data released by Financial Supervisory Service on Sept. 1.
![](http://res.heraldm.com/content/image/2016/09/01/20160901001197_0.jpg)
The commercial banks reported net profit of 1.6 trillion won in the cited period. However, the loss of 2 trillion won by state-run banks, including Korea Development Bank -- the main creditor of debt-ridden Hanjin Shipping -- dragged down the combined figure.
“The restructuring of companies like Daewoo Shipbuilding & Marine Engineering, STX and Hanjin Shipping raised the bad debt expenses of state-run banks,” an FSS official said.
The bad debt expense of all South Korean banks increased to 6.3 trillion won in the cited period, compared to 4.1 trillion won on-year.
However, as banks put aside hundreds of billion won in loan-loss provisions, Korean bank’s non-performing loan ratio decreased to 1.79 percent as of end of June, down 0.08 percent from March.
By Ahn Sung-mi (
sahn@heraldcorp.com)