The bad loan ratio of South Korean banks inched down in the third quarter of this year from three months earlier on a fall in new soured loans, the financial watchdog said Friday. 

The ratio of bad loans extended by 17 banks came to 1.41 percent at the end of September, down 0.09 percentage point from the previous quarter, according to the Financial Supervisory Service.

The bad loan ratio refers to the proportion of a bank's non-performing loans to their total lending. A debt that has been in arrears for more than 90 days and is at risk of default is considered an NPL.

Total soured loans reached 23.2 trillion won ($20.2 billion), which breaks down to 20.9 trillion won in corporate debts and 2.2 trillion won in household lending.

Compared to a year earlier, their bad loan ratio also fell 0.31 percentage point, it noted. 

The on-quarter decrease is attributable to a fall in fresh bad loans which stood at 4.4 trillion won during the July-September period, compared with 5.9 trillion won in the second quarter, according to the watchdog.

Banks' debt write-offs amounted to 5.3 trillion won in the third quarter, 1.2 trillion less than the previous quarter, it added. (Yonhap)