Lead

South Korean banks' bad-loan ratio rose in the first quarter of the year from three months earlier, according to data from the Financial Supervisory Service as reported by Yonhap News Agency. The increase was attributed to a decrease in write-offs of soured loans. The data also showed that the combined net profit of 20 domestic banks edged down 3.9 percent on a year-over-year basis to 6.7 trillion won (US$4.47 billion), due mainly to a sharp fall in non-interest income.

Coverage comparison

Yonhap News Agency published three separate reports on these results: one on first-quarter earnings (May 20), one on overseas operations (May 21), and a later one on asset quality (May 29). All three draw on the financial regulator's data and adopt a neutral narrative. The earnings article emphasized the decline in non-interest income as the key cause of the lower profit, while the overseas article highlighted a 2.3 percent increase in net income from foreign units, driven by higher interest income. The asset-quality report focused on the rise in the bad-loan ratio, attributing it to fewer write-offs of bad loans. The three stories are complementary, each providing a distinct empirical slice of the same data.

Key claims

Below are specific findings from the Yonhap reports of the FSS data:
  • The ratio of loans classified as substandard or below (SBL) to total loans stood at 0.6 percent as of end-March, up 0.03 percentage point from the prior quarter.
  • The value of SBL loans came to 17.7 trillion won, up 1.1 trillion won from three months earlier.
  • Newly classified soured loans reached 5.5 trillion won in the first quarter, down 400 billion won from the previous quarter.
  • Loan write-offs stood at 4.4 trillion won in the January-March period, down 1.3 trillion won from the prior quarter.
  • The SBL ratio for business loans rose to 0.74 percent (up 0.04 percentage point), while for household loans it increased to 0.32 percent (up 0.01 percentage point).
  • Combined net profit of the 20 banks stood at 6.7 trillion won in the first quarter, a 300 billion won decline from the previous year's 6.9 trillion won.
  • Interest income rose 6.4 percent to 15.8 trillion won, but non-interest income fell 35.6 percent to 1.3 trillion won.
  • Costs to cover loan losses decreased 16.2 percent to 1.4 trillion won.
  • The banks' return on assets dropped to 0.64 percent from 0.71 percent a year earlier, and return on equity fell to 8.68 percent from 9.57 percent.
  • For overseas operations, combined net income increased 2.3 percent to US$1.65 billion from US$1.61 billion the prior year.
  • The overseas net income represented 9.8 percent of the banks' total income of 24.1 trillion won.
  • Overseas return on assets declined to 0.71 percent from 0.74 percent, while total assets grew 7.4 percent to US$233.13 billion.
  • The SBL ratio for overseas loans was 1.36 percent at the end of 2025, down 0.1 percentage point from a year earlier.
As of the end of 2025, domestic banks operated 211 subsidiaries, local branches, and offices in 41 countries.