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).

* Please refer to the attached file for details.