Outstanding corporate loans at domestic banks rose 30.7 percent to 1,400.5 trillion won at the end of the second quarter from 1,071.1 trillion won at the end of 2021, according to data the Bank of Korea submitted to lawmaker Ahn Do-geol.
Over the same period, delinquent corporate loans jumped 248.3 percent to 10.1 trillion won from 2.9 trillion won, while the delinquency rate climbed to 0.68 percent from 0.26 percent.
The deterioration was sharper at nonbank financial institutions. Corporate loan delinquency rates at savings banks, mutual financial institutions, insurers and credit finance companies rose to 6.28 percent in the second quarter from 1.32 percent at the end of 2021.
The share was more than nine times the 0.68 percent delinquency rate recorded by banks.
Bank corporate loan delinquencies have risen each year, increasing from 3.2 trillion won at the end of 2022 to 5.3 trillion won in 2023, 6.9 trillion won in 2024 and 8.4 trillion won in 2025 before exceeding 10 trillion won this year.
Corporate lending across banks and nonbank financial institutions reached 2,000.1 trillion won ($1.49 trillion) in the second quarter, up 29.8 percent from 1,540.9 trillion won at the end of 2021.
Nonbank corporate lending increased to 599.6 trillion won from 469.8 trillion won over the same period.
Signs of strain were also visible among self-employed borrowers.
Loans to individual business owners increased 20.8 percent to 722.3 trillion won in the second quarter from 597.9 trillion won at the end of 2021, while their delinquency rate rose nearly fivefold to 2.22 percent from 0.45 percent.
About 1.64 million self-employed borrowers held loans from multiple financial institutions as of the second quarter, with their combined debt reaching 645.7 trillion won.
The Bank of Korea has estimated that a 1 percentage point increase in lending rates would raise annual household interest payments by 13.4 trillion won and add 4.4 trillion won to the annual interest burden of self-employed multiple borrowers.
Ahn called for financial policy to focus not only on controlling total lending but also on identifying where delinquencies are accumulating and which borrowers are struggling to absorb higher interest costs.
AJP Takeaways
- Corporate loan delinquencies at South Korean banks reached 10.1 trillion won in the second quarter, up 248.3 percent from the end of 2021.
- The nonbank corporate loan delinquency rate rose to 6.28 percent, more than nine times the 0.68 percent rate at banks.
- Total corporate lending across banks and nonbank financial institutions exceeded 2,000 trillion won, while delinquency indicators also worsened among self-employed borrowers.
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