The overseas non-performing loan portfolios of the four major banks in South Korea surged to nearly 300 billion won in just one year. The rapid increase raised concerns as delinquency amounts spiked due to the impact of high-interest rate shocks, prompting warnings about the management of overseas financial stability.
According to the financial industry on Jan. 4, the overseas non-performing loans of the four major banks, KB Kookmin, Shinhan, Hana, and Woori Bank, amounted to 281.1 billion won (US$214.3 million) as of the end of the third quarter of last year. This represents a 54.4 percent growth compared to the same period in the previous year, which saw 152.9 billion won. Non-performing loans are commonly used by financial institutions as a criterion to identify bad loans and refer to loans that have been in arrears for more than three months.
When examined by individual banks, the aggregated amounts for non-performing loans were 118.4 billion won for Woori Bank, 83.3 billion won for Hana Bank, 64.9 billion won for Shinhan Bank, and 14.5 billion won for KB Kookmin Bank. The growth rate during the surveyed period ranged from 55 percent in some cases to as high as 370 percent in others.
During the same period, the overseas loan delinquency amount for the four major banks also increased by 73.7 percent, rising from 146.6 billion won to 198.9 billion won.
While the proportion of non-performing loans to total loans for these banks is less than 0.1 percent, the rapid expansion of the non-performing loan volume is a concerning development. Particularly worrisome is the fact that most of these non-performing loans are attributed to the sluggish global commercial real estate market under a high-interest rate environment. Banks are intensifying their monitoring efforts in response to this situation.