South Korean banks are facing a potential spike in bad loans as the total amount of loans extended to small and medium-sized businesses, whose repayments have been delayed due to the COVID-19 pandemic, reaches nearly KRW37tn (USD27bn). The five banks estimated to have extended the loans are KB Kookmin, Shinhan, Hana, Woori, and NH NongHyup. Over 95% of the loans, or KRW34.8tn, were rolled over, while the remaining KRW1.8tn was either from delays in installment-based repayments of principals or repayment of interest by corporations. The loans have been extended since early 2020 when the banking industry decided to extend the loan repayment deadlines of principals for mom-and-pop storeowners and small-and-medium-sized businesses during the global pandemic. With financial support set to end mostly by September this year, concerns have risen over a potential spike in insolvencies in the country.
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