'Empty Loans' Reach Record High... Q2 Balance Hits 6.4 Trillion Won

[Economy 365]

So-called "empty loans," in which borrowers are unable to even pay the interest on money borrowed from major commercial banks, have reached a record high.

At the end of the second quarter of this year, the balance of non-accrual loans at the five major banks stood at 6.4108 trillion won, representing a 28% increase from the end of last year.

Non-accrual loans refer to credits where banks no longer recognize interest as income or where principal and interest payments have been overdue for three months or more.

Their share of total loans also rose from 0.27% at the end of last year to 0.34%, marking the highest level since February 2020.

The growth in bad loans was particularly pronounced in the corporate sector.

Corporate non-accrual loans surged 36.4% from the end of last year to 4.6498 trillion won.

Household non-accrual loans also increased by 10.2% over the same period to 1.7610 trillion won.

The banking sector attributes the rise in non-accrual loans to prolonged high interest rates, sluggish domestic demand, and the downturn in the commercial real estate market, and is strengthening soundness management through the write-off and sale of non-performing loans.

*This article was produced using AI audio.
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