Delinquency ratio on real estate project financing loans rises in Q1

The delinquency ratio on real estate project financing (PF) loans rose sharply in the first quarter of the year from three months earlier, data showed Wednesday, amid concerns about possible risks stemming from such loans.

Kwon Dae-young, secretary-general of the Financial Services Commission (FSC), speaks during a meeting on PF-related loans in Seoul on Wednesday. [YONHAP]

The delinquency ratio on real estate project financing (PF) loans rose sharply in the first quarter of the year from three months earlier, data showed Wednesday, amid concerns about possible risks stemming from such loans.

The delinquency ratio on real estate PF loans came to 3.55 percent as of the end of March, up 0.85 percentage points from three months earlier, according to data from the Financial Supervisory Service (FSS).

From a year ago, the ratio rose 1.54 percentage points, the data showed.

The total value of outstanding loans declined to 134.2 trillion won ($97.6 billion) from 135.6 trillion won over the cited period.

In particular, the PF-related loan delinquency ratio for savings banks stood at 11.26 percent at the end of March, while that for securities firms jumped to 17.57 percent.

The spike in the delinquency ratio came as the financial sector tightened risk management on such loans amid a decrease in new loans.

Real estate PF loans have become a major risk factor in the financial sector amid a prolonged slump in the property market due to price hikes.

Taeyoung Engineering & Construction, the country's 16th largest builder, was forced to apply for a debt restructuring program in late December after it faced a liquidity shortage due to real estate PF loans.

The financial watchdog said measures taken last month will help make a soft landing for such risky PF-related loans.

Yonhap