The lengthy economic slump has led to growing overdue small- and medium-size companies (SME) loans.
According to financial sources, the ratio of bank loans in arrears to total outstanding loans rose significantly during the first two months of the year.
At Kookmin Bank, the biggest lender to SMEs, the rate increased to 3.8 per cent from 3.2 per cent at the end of last year.
The rate for the Industrial Bank of Korea increased to 2.8 per cent from 1.8 per cent. Woori Bank saw its rate of overdue loans to SMEs rise to 2.9 per cent from 2 per cent.
"With the prolonged economic slump here, more SMEs are approaching their limits," one bank official said. "Now overdue loans to small- and medium-sized businesses are more troubling than household debts."
Banks are trying to counter the problem with more write-offs of SMEs’ non-performing loans (NPLs).
