The total loan balance is estimated at 1,064 trillion… Loans alone increased by 4.3 trillion won in the third quarter
The amount of self-employed loan delinquency reached the highest level ever. It is observed that the repayment burden of self-employed people who have survived with loans from financial institutions since the COVID-19 pandemic has reached its limit.
According to the ‘Status of Self-Employed Loans’ submitted by the Bank of Korea to Rep. Yang Bu-nam of the Democratic Party of Korea, a member of the National Assembly’s Public Administration and Security Committee, on the 29th, the total balance of self-employed people’s loans from financial institutions as of the end of the third quarter of this year was estimated at KRW 1,064.4 trillion.
This is the highest record since related statistics were compiled in 2012, an increase of 4.3 trillion won in three months compared to the end of the second quarter (1,060.1 trillion won).
The status of loans to self-employed people is the result of the Bank of Korea’s analysis of its own household debt database (panel data of about 1 million borrowers), considering individual business loan holders as self-employed, and adding their individual business loans and household loans.
The growth rate of self-employed loans (compared to the previous quarter) fell to 0.1% in the fourth quarter of last year, rebounded to 0.3% in the first quarter of this year, and is rising, maintaining 0.4% in both the second and third quarters.
Among self-employed borrowers, the loan balance of multiple borrowers was 754.4 trillion won as of the end of the third quarter, the highest since the third quarter of last year (755.6 trillion won). The average loan amount per person was 430 million won.
The arrears of self-employed people (based on principal and interest overdue for more than one month) totaled 18.1 trillion won at the end of the third quarter, an increase of 2.2 trillion won compared to the previous quarter, recording the largest amount ever. As of the third quarter, the delinquency rate of self-employed individuals at financial institutions was 1.70%, 0.20% higher than the second quarter (1.50%). 1.70% is the highest level in 9 years and 6 months since the first quarter of 2015 (2.05%).
In its financial stability report, the Bank of Korea said, “We must pay attention to the recent increase in the number of self-employed borrowers with low income and low credit, closely analyze their debt repayment ability and respond selectively,” adding, “We should continue to provide financial support to self-employed people who have experienced temporary difficulties due to high interest rates. “For some vulnerable self-employed people who have a low chance of recovery, there is a need to support their recovery through active debt adjustment and re-employment training,” he advised.
(Sejong = News 1)
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