FSC Press Release

(March 3, 1999)

Bank Nonperforming Loans at end-December, 1998

As of end-December, 1998, total nonperforming loans (loans classified as either substandard, doubtful or estimated loss) of 22 commercial banks stood at 22.22 trillion won, a 4.3% increase compared to a year ago. This leaves the NPL ratio at 7.4%, a 1.6%p increase from the 5.8% recorded as of end-December, 1997. Meanwhile, total loans amounted to 300.6 trillion won at end-December, 1998.

Total NPLs increased during the year notwithstanding NPL purchases by the Korea Asset Management Corporation (KAMCO) due to corporate resolutions during the course of corporate restructuring, rise in court receivership and composition proceedings triggered by laggard economy and strengthened asset classification standards (refer to [Strengthening of Loan Classification Standards and Provisioning Requirements] below).

Total NPLs of Commercial Banks¹⁾

(in 100 million won, %)

	end '94	end '95	end '96	end '97	Mar '98	Jun '98	Sep '98	Dec '98
total NPLs	117,227	124,839	122,255	213,163	280,437	290,766	224,224	222,246
NPL ratio	(5.6)	(5.2)	(3.9)	(5.8)	(7.3)	(8.6)	(7.1)	(7.4)

Note : 1) end '96 figures and on include Housing and Commercial Bank, whereas end '97 figures and on do not include the 5 closed banks and include Long-term Credit Bank

2) loans classified as either substandard, doubtful or estimated loss

3) figures in parenthesis represent NPL ratios

Total NPLs of Commercial Banks at December, 1998

(in 100 million won, %)

	Total Loans1)	Loan Classification			NPL5)
		Substandard2)	Doubtful3)	Estimated Loss4)	Amount	Ratio
Cho Hung Hanvit (Commercial) (Hanil) Korea First Seoul Korea Exchange	285,297 504,849 228,976 275,873 187,915 166,559 316,924	8,280 14,080 4,709 9,371 21,885 14,902 8,723	5,872 11,786 4,413 7,373 15,223 13,177 5,668	1,003 1,315 564 751 1,215 1,793 693	15,155 27,181 9,686 17,495 38,323 29,872 15,084	5.31 5.38 4.23 6.34 20.39 17.93 4.76
(Subtotal [Top 6])	1,461,544	67,870	51,726	6,019	125,615	8.59
Kookmin (Kookmin) (Long-term Credit) Housing Shinhan Koram Hana Boram Peace	409,976 288,954 121,022 301,685 247,897 124,782 101,789 72,141 40,611	15,030 6,991 8,039 15,017 5,919 1,580 2,482 1,156 1,956	8,709 6,663 2,046 7,908 4,752 2,125 642 1,865 2,880	600 599 1 1,246 206 21 60 5 22	24,339 14,253 10,086 24,171 10,877 3,726 3,184 3,026 4,858	5.94 4.93 8.33 8.00 4.39 2.99 3.13 4.19 11.96
(Subtotal)	1,298,881	43,140	28,881	2,160	74,181	5.70
Nationwide Banks	2,760,425	111,010	80,607	8,179	199,796	7.20
Daegu Pusan Kwangju Cheju Jeonbuk Kangwon Kyongnam Chungbuk	64,121 51,009 34,891 8,725 13,942 17,394 43,100 12,462	2,579 1,590 657 371 948 893 1,351 608	2,124 935 689 1,544 364 3,372 2,073 1,796	104 326 13 22 2 19 56 14	4,807 2,851 1,359 1,937 1,314 4,284 3,480 2,418	7.50 5.59 3.89 22.20 9.42 24.60 8.07 19.40
Regional Banks	245,644	8,997	12,897	556	22,450	9.10
TOTAL	3,006,069	120,007	93,504	8,735	222,246	7.40

1) Includes credit associated with trust accounts

2) Substandard : Entities with credit in arrears of 3 months or more or under court receivership etc. of which a certain amount of credit is expected to be recovered through disposal of collateral etc.

3) Doubtful : Entities with credit in arrears of 3 months or more or under court receivership etc. of which due to insufficient collateral are expected to register a loss, although the actual amount may not be identifiable

4) Estimated Loss : Entities with credit in arrears of 3 months or more or under court receivership etc. of which a resulting loss is to be posted at once

5) NPL = substandard + doubtful + estimated Loss

[Strengthening of Loan Classification Standards and Provisioning Requirements]

(effective July 1, 1998)

1. Strengthening of prudential regulation on overdue loans to incorporate international standards

- Normal : loans in arrears by less than 3 months -> loans in arrears by less than 1 month

- Precautionary : loans in arrears by 3 months to less than 6 months -> loans in arrears by 1 month to less than 3 months

- Substandard and below : loans in arrears by no less than 6 months -> loans in arrears by no less than 3 months

2. Provisioning requirements for precautionary loans will be increased from 1 % to 2 %

3. Non-tradable securities (privately-placed bonds, commercial papers and guaranteed bills) of trust accounts will be subject to loss provisioning (provisioning for bond amortization)

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