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Photo courtesy of Yonhap News |
[Alpha Biz= Paul Lee] SEOUL, November 9, 2025 — South Korea’s four largest financial holding groups — KB Financial Group, Shinhan Financial Group, Hana Financial Group, and Woori Financial Group — have collectively posted record cumulative profits exceeding ₩15 trillion (US $10.9 billion) for the first three quarters of 2025.
However, the impressive earnings are being overshadowed by a sharp rise in delinquent and at-risk loans, signaling growing strain in household and corporate credit quality.
As of the end of the third quarter, the combined volume of “precautionary loans” — those delinquent for one to three months — reached ₩18.35 trillion, the highest level since the first quarter of 2019, according to data compiled from the financial groups’ regulatory filings.
In contrast, the average Non-Performing Loan (NPL) coverage ratio across the four banking groups has dropped to 123.1%, marking the lowest level on record.
The NPL coverage ratio measures a bank’s ability to absorb potential loan losses; a lower ratio indicates weakened credit-loss buffers.
Analysts note that the divergence between record profits and deteriorating asset quality reflects rising credit risk amid high interest rates and sluggish household debt repayment.
“Banks are maintaining strong short-term profitability, but their growing exposure to overdue loans poses a potential risk to financial stability heading into 2026,” said a Seoul-based banking analyst.
Despite increasing provisions, Korea’s major banks have benefited from interest-margin expansion in the first half of the year, but regulators are now closely monitoring the rapid deterioration in loan performance and declining coverage ratios.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
