Business · Economy · 8 hrs ago
Bad loans to small firms near 3 trillion won at South Korea's four biggest banks
At the end of September, bad loans to small businesses at South Korea’s four biggest banks neared 3 trillion won.
The total was up by about 300 billion won from the same time a year earlier.
These loans are considered unlikely to be repaid normally, often because payments are at least three months late or the borrower’s finances have weakened.
Small-business loan delinquencies reached 0.58%, compared with 0.3% for large companies and 0.4% across all loans at the four banks.
The figures point to pressure on smaller firms and could add to banks’ costs and risks.
The government is urging banks to lend more to businesses to shift funding towards companies and away from property and household lending.
It has also announced 4.5 trillion won in government-backed loans over three years for small businesses recommended by local governments, while concerns remain that targets could take priority over careful checks of borrowers’ ability to repay.
South Korea’s four largest banks had 2.9716 trillion won in non-performing loans to small and medium-sized enterprises at the end of September.
The total was about 300 billion won higher than a year earlier and accounted for 58% of all non-performing loans across the banks.
The banks’ SME loan delinquency rate was 0.58%, compared with 0.3% for large-company loans and 0.4% for all loans.
The report warned that expanding business lending without careful checks on borrowers’ ability to repay could increase banks’ credit risks.
Banks have been writing off and selling bad loans, while the government is encouraging more financing for businesses.
- Who
- South Korea’s four largest banks: KB Kookmin, Shinhan, Hana and Woori.
- What
- Their non-performing loans to small and medium-sized enterprises reached 2.9716 trillion won.
- When
- At the end of September 2026.
- Where
- South Korea.
- Why
- The sources link the increase to worsening repayment conditions for small businesses, amid economic pressures and high interest rates.
Government policy advocates
Banks and risk-management critics
Policy aim
Government policy advocates
The government is encouraging more business lending and investment to shift financial resources toward companies and support regional economies.
Banks and risk-management critics
Lending targets should not take priority over careful assessment of borrowers’ creditworthiness and ability to repay.
Risks and benefits
Government policy advocates
Expanded financing is intended to help businesses obtain funding and support economic growth.
Banks and risk-management critics
Rapid lending growth could increase bad loans, weaken banks’ soundness and delay corporate restructuring.
The four banks’ SME non-performing loans stood at 2.6733 trillion won.
The Financial Services Commission announced a plan for 4.5 trillion won in guaranteed loans over three years to local government-recommended SMEs.
The four banks’ SME non-performing loans reached 2.9716 trillion won, and their SME loan delinquency rate was 0.58%.
Maeil Business reported the figures and concerns about expanding business lending.
- SME non-performing loans
- 2.9716 trillion won
- Year-on-year increase
- About 300 billion won
- Share of all non-performing loans
- 58%
- SME loan delinquency rate
- 0.58%
- Large-company loan delinquency rate
- 0.3%
- Planned guaranteed loans
- 4.5 trillion won over three years
What people are saying
Banks are basically institutions that avoid risk and pursue stable business.
If banks are continually told to increase corporate lending when SMEs are in serious business trouble and high interest rates are compounding the problem, non-performing loans will inevitably rise and the burden will grow.