Five local banks' delinquency rate hits 16-year high
Updated
Updated · 매일경제 · May 10
Five local banks' delinquency rate hits 16-year high
10 articles · Updated · 매일경제 · May 10
At end-March, the average rate reached 1.30%, the highest since 2009, as regional lenders also lost deposit share to Kakao Bank, K Bank and Toss Bank.
Internet banks' won deposits jumped 127.7% from 2021 to 2025, while six local banks' deposits rose 18.8%, shrinking the size gap from 3.2 times to 1.7 times.
Officials say weakening regional economies, SME closures, falling demand deposits and weaker mobile platforms are eroding local banks' core funding base while increasing pressure on asset quality.
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South Korea Faces 16-Year Peak in Bank Loan Delinquencies: Economic Drivers and Stability Risks in 2026
Overview
South Korea's banking sector is experiencing its highest loan delinquency rates in 16 years, signaling a structural decline in financial soundness. The average delinquency rate for the five major banks rose from 0.34% in late 2025 to 0.40% by early 2026, with corporate loans and loans to large corporations showing especially sharp increases. Small and medium-sized enterprises and self-employed borrowers are under particular strain, reflecting broader economic challenges. This trend highlights growing risks for banks and the economy, as rising delinquencies point to deeper vulnerabilities across both commercial and regional lenders.