Bank loan delinquency ratios by South Korea’s large companies reached an all-time high of 2.59 percent as of late August due to crumbling shipping industry.

According Financial Supervisory Service (FSS) on Friday, the delinquency ratio of won-denominated bank lending to large companies recorded 2.59 percent as of the end of August, up 0.28 percentage point from the previous month. It is the highest since the data was tracked from 2008. The previous peak was 2.36 percent in August 2012 and it spiked to 2.17 percent in June this year before the all-time high was replaced in August. The loan delinquency rate refers to the percentage of loans with principal or interest payment past due by at least one month.

The sharp rise in bank loan delinquency rate is mainly caused by overdue debts of STX Offshore & Shipbuilding Co. that entered court receivership in May, FSS said. The changes in loan delinquency ratio are reflected usually a month after a company becomes insolvent.

The bank loan delinquency ratio for September is expected to be even bigger due to the aftermath of Hanjin Shipping Co. that headed to bankruptcy court in late August.

For small- and medium-sized companies and household loans, the loan delinquency rates moved up compared to a month ago. The delinquency rate of loans to small- and medium-sized firms increased 0.11 percentage point on month to 0.93 percent in August while that of households slightly went up by 0.02 percentage point to 0.34 percent.

The delinquency rate of mortgage-backed loans was 0.25 percent, up 0.01 percentage point on month and the soured rate of credit card debt inched up by 0.04 percentage point on month to 0.53 percent. The delinquency rate of collective loans was 0.38 percent, up 0.01 percentage point on month.

By Kim Hyo-sung

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