NPL Ratio of Large Companies Higher than That of SMEs

The non-performing loan (NPL) ratio of large companies is reportedly higher than that of small and medium-sized enterprises (SMEs) in the second quarter this year for the first time after the global financial crisis of 2008.

According to the financial industry on November 28, SMEs’ NPL-to-total loan ratio was 2.15%, while that of large companies was 2.31% in Q2 2013. As of late June, SMEs’ NPLs amounted to 4.4 trillion won (US$4.1 billion), whereas those of large firms totaled 5 trillion won (US$4.7 billion). In the third quarter, the gap widened with 2.15% for SMEs and 2.55% for large firms.

A researcher at the IBK Economic Research Institute said, “The potential risks of the shipping, shipbuilding, and construction industries are on the rise under the circumstance that their delinquency and bankruptcy rates have been increasing starting in 2012.” The researcher added, “The crisis of the Tong Yang Group contributed to a dramatic increase in large firms’ NPLs.”