The delinquency rate on real estate project financing (PF) loans has dropped to the 3% range for the first time in a year.
The Financial Services Commission (FSC) said Monday that it held a "Real Estate PF Status Review Meeting" with financial industry representatives on Thursday and shared the latest figures. The delinquency rate on PF loans across the financial sector stood at 3.88% as of the end of last year, down 0.36 percentage points from the previous quarter. Continued efforts to clean up distressed assets brought the rate back into the 3% range for the first time since the end of 2024 (3.42%).
However, the delinquency rate on land-backed loans, handled primarily by non-bank financial institutions, remained high at 29.68%.
Total real estate PF exposure across the financial sector fell by 3.6 trillion won to 174.3 trillion won ($128.2 billion) at the end of last year. Of this, loans classified as "precautionary" (C) or "substandard" (D) — requiring resolution or restructuring — totaled 14.7 trillion won, accounting for 8.4% of the total.
Financial industry representatives called for flexibility in implementing the upcoming real estate PF soundness regulatory reforms set to take effect next year, citing "growing uncertainty due to instability in the Middle East."