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S. Korean banks' NPL ratio falls below 1 pct for first time in decade

All Headlines 16:49 December 02, 2018

SEOUL, Dec. 2 (Yonhap) -- South Korean banks' nonperforming loans (NPLs) ratio fell below one percent for the first time in 10 years, due to corporate restructuring and stricter lending rules, the financial regulator said Sunday.

The NPL ratio, which measures the rate at which a bank's loans are not repaid, fell to 0.96 percent at the end of the third quarter of 2018, the lowest level since it hit 0.82 percent at the end of September, 2008, the Financial Supervisory Service (FSS) said in a statement.

"Conglomerates (particularly in the shipbuilding and shipping industries) are in the process of wrapping up their restructuring measures. Increased home-backed mortgages also resulted in a decline in NPLs in the third quarter," the statement said.

Moreover, the financial authorities have adopted stricter lending rules on fresh loans, resulting in reduced bad debt.

The value of NPLs, or bad debts, decreased 8.2 percent to 17.8 trillion won (US$15.9 billion) at the end of the third quarter compared to a year earlier, it said.

The FSS said it will have banks put aside an ample amount of loan-loss provisions to offset any financial losses.

This graphic shows South Korean banks' NPL ratio at the end of the third quarter along with previous figures. (Yonhap)

kyongae.choi@yna.co.kr
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