The delinquency rate for bank loans fell 0.17 percentage point on-month to 0.47 in December, according to the Financial Supervisory Service, the country's financial watchdog.

It represents a decrease for two months in a row, after dipping to 0.64 percent in November from 0.81 percent a month earlier.

FSS officials cited seasonal effects.

"The delinquency rate dropped as banks reduced bad loans via write-offs and sales ahead of the year's end," an FSS official said.

The delinquency rate of loans extended to large firms plunged to 0.77 percent in December, the first time in a year that its posted a zero percent level.

The rate stayed in the 2 percent range between June and October last year after Hanjin Shipping Co. and STX Offshore & Shipbuilding Co. were placed under court receivership.

Meanwhile, that of loans to small and medium-sized firms and households shed 0.22 percentage point and 0.04 percentage point, respectively, on-month to 0.63 percent and 0.26 percent in December. (Yonhap)