Card Delinquency Rate Hits 10-Year High Amid Domestic Demand Slump

Due to the prolonged sluggishness in domestic demand, the delinquency rate of eight domestic specialized card companies reached its highest level in 10 years and 9 months as of the end of last June.

According to the “2025 First Half Business Performance of Specialized Credit Finance Companies” released by the Financial Supervisory Service on the 5th, the delinquency rate of the eight specialized card companies (Samsung, Shinhan, Hyundai, KB Kookmin, Woori, Hana, Lotte, and BC Card) as of the end of last June was 1.76%, the highest in 10 years and 9 months since September 2014 (1.83%). This marks an increase of 0.11 percentage points from the end of last year (1.65%), which had recorded the highest delinquency rate on an annual basis. The delinquency rate of card companies refers to the ratio of overdue payments for card payments, installment payments, revolving credit, long-term card loans (card loans), credit loans, etc., that are overdue by one month or more.

Due to the poor domestic economic conditions, the repayment capacity of small and medium-sized enterprises (SMEs), small business owners, and the general public who had taken on card debt has decreased, leading to a deterioration in the soundness of card companies, according to an analysis. In fact, the ratio of non-performing loans (substandard and below) of card companies has also increased. Non-performing loans refer to loans held by financial institutions that are difficult to recover or have a high likelihood of becoming non-performing. As of the end of June, the non-performing loan ratio of card companies was 1.30%, up by 0.14 percentage points compared to the end of last year (1.16%).

Banks have also continued to see an increase in non-performing loans. As of the end of June, the non-performing loan ratio of domestic banks remained at 0.59%, the same as the end of March. This is the highest level in four years since March 2021 (0.62%). Notably, as of the end of June, the non-performing loan ratio of banks targeting SMEs reached 0.90%. This represents an increase of 0.01 percentage points from the end of March (0.89%) and marks the highest level in five years and three months since the end of March 2020 (0.93%). The non-performing loan ratio for SMEs has been increasing for two consecutive years since the end of June 2023 (0.57%).