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FAQ

  • Please tell us about the security of SME loans.

  • Korean banks' SME loans have continued increasing for the past few years driven by rising demand for finance in the real sector with booming SME businesses.

    Unit: trillion won, %
    Sort 2005 2006 2007 Jan.~Sep. 2008
    SME Loans 12.4 (5.1) 45.3 (17.7) 68.2 (22.6) 46.7 (12.6)

    Note : Amount of increase (increase rate)

    This illustrates partial recovery of domestic banks' industrial financing function, which was overly diminished after the Asian financial crisis.

    The percentage of corporate loans by domestic banks reached 75 percent in 1996 before the Asian financial crisis.

    However, the crisis led banks to engage in safe asset-oriented fund management, such as mortgage loans, driving the share of corporate loans down to 48.8 percent by the end of 2005. Then since 2006, increased SME loans has raised the percentage again to 55.6 percent as of today.

    Unit: trillion won, %

    Type Year-end 1996 Year-end 2005 End-Sep. 2008
    Corporate Loans 85.1 (75.0) 299.6 (48.8) 500.5 (55.6)
    Household Loans 22.2 (19.6) 300.5 (48.9) 379.5 (42.2)
    Loans in Local Currency 113.5 (100.0) 614.2 (100.0) 900.2 (100.0)

    Note ( ): percentage

    Despite the increase in SME loans, the SME loan delinquency ratio is mere 1.50 percent as of end of September 2008 and the coverage ratio remains high (197.1% for the entire banking sector).

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