[THE INVESTOR] South Korean banks’ nonperforming loan ratio has risen to the highest in five years, Bank of Korea data showed on June 30.

The data showed that nonperforming loan ratio stood at 2.6 percent at the end of March, which is the highest level since March 2011, when the figure stood at 2.8 percent.

The ratio for commercial banks was 1.8 percent, while special banks -- state-run banks set up according to specific laws -- had a ratio of 3.5 percent. 



Local banks have extended total of 1.061 quadrillion won (US$ 917 billion) in loans, 63.4 percent of which is accounted for by those given to corporations.

Of the corporate loans, 40.8 percent was given to large companies, and 58.9 percent to SMEs.

By industry, transportation manufacturing that includes shipbuilders had the higher nonperformance rate at 11.1 percent.

The data showed that a large chunk of commercial banks’ loans were made to real estate-related companies, raising concerns that a slowdown in the property market could deal a heavy blow to local banks. Of the loans extended by commercial banks, 19.1 percent had been given to companies in the concerned industry.

BOK’s data also showed that local banks may be taking a lax approach in managing their loans. According to the report, up to 88 percent of the loans given to companies considered high-risk were categorized as being stable. Furthermore, more than 70 percent of the loans given to companies whose continued existence has been questioned in audits were also rated as being stable.

By Choi He-suk (cheesuk@heraldcorp.com)