Loan exposure to real estate development projects drops in Q1

SEOUL, July 1 (Yonhap) -- Financial institutions' exposure to real estate development dropped sharply in the first quarter of the year as they struggled to write off or reduce loans extended to risky projects, data showed Tuesday. According to the data from the Financial Supervisory Service, banks, insurers and other financial institutions held 190.8 trillion won (US$141 billion) worth of real estate project financing (PF) loans as of March, down 11.5 trillion won from three months ago. Of the total, risky real estate PF loans were tallied at 21.9 trillion won at the end of March, which was equivalent to 11.9 percent of the total loans. The delinquency ratio of real estate PF loans stood at 4.49 percent at the end of March, sharply up 1.07 percentage points from three months earlier. Earlier, the watchdog has said over half of risky PF loans, or 12.6 trillion won, were expected to be restructured by the end of June via sell-offs or recapitalization. PF loans have been one of the sticky issues in the financial market as a rise in soured loans, which started in late 2023, was feared to hurt financial institutions and the financial stability in the overall market. sam@yna.co.kr(END)

https://img.yna.co.kr/etc/inner/EN/2025/07/01/AEN20250701002300320_01_i_P2.jpg

SEOUL, July 1 (Yonhap) — Financial institutions’ exposure to real estate development dropped sharply in the first quarter of the year as they struggled to write off or reduce loans extended to risky projects, data showed Tuesday.

According to the data from the Financial Supervisory Service, banks, insurers and other financial institutions held 190.8 trillion won (US$141 billion) worth of real estate project financing (PF) loans as of March, down 11.5 trillion won from three months ago.

Of the total, risky real estate PF loans were tallied at 21.9 trillion won at the end of March, which was equivalent to 11.9 percent of the total loans.

The delinquency ratio of real estate PF loans stood at 4.49 percent at the end of March, sharply up 1.07 percentage points from three months earlier.

Earlier, the watchdog has said over half of risky PF loans, or 12.6 trillion won, were expected to be restructured by the end of June via sell-offs or recapitalization.

PF loans have been one of the sticky issues in the financial market as a rise in soured loans, which started in late 2023, was feared to hurt financial institutions and the financial stability in the overall market.