Won-denominated loan delinquency rates at South Korean banks ticked upward in April 2026, driven by a rise in newly defaulted debt that outpaced resolved non-performing accounts. Data from the Financial Supervisory Service (FSS) indicates that new delinquencies increased by 200 billion won ($130.3 million) over the month, whereas the clearing of bad debt dropped by 2.7 trillion won ($1.76 billion). This dynamic pushed up delinquency averages across both industrial and retail credit segments.
On the commercial side, the default rate reached 0.74% by late April, up from 0.68% the prior month. This pressure was heavily concentrated among small and medium-sized enterprises (SMEs), where delinquencies climbed from 0.81% to 0.90%, while the rate for major corporations held steady at 0.22%. Similarly, the household sector saw its delinquency rate rise from 0.40% to 0.42% over the same window, heavily influenced by unsecured personal credit lines, which saw their default rates jump from 0.76% to 0.83%.
Despite the minor erosion in asset quality through April, credit demand remained highly active into May. According to reporting from the Bank of Korea, commercial banks expanded their total lending books during the month on the back of resilient corporate credit demand and real estate financing needs. The central bank highlighted that an increasing requirement for intermediate payment facilities for pre-sold residential units acted as a primary catalyst keeping mortgage pipelines robust.
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