Figures compiled by the FSS show that bank loans classified as substandard or below (SBLs)—substandard, doubtful, or presumed loss—totaled 18.6 trillion won at the end of 2003, up 3.5 trillion won from 15.1 trillion won a year earlier. New SBLs during 2003 totaled 35.2 trillion won, compared with 31.7 trillion won for SBLs that have been resolved or otherwise cleaned up during the year. The ratio of SBLs to the total outstanding loans rose to 2.62% from 2.33% a year earlier. The ratio for non-performing loans was 1.98% for 2003.

A breakdown of the SBLs shows that SBLs from corporate borrowers totaled 11.7 trillion won (2.69%), compared with 4.3 trillion won (1.74%) for household SBLs and 2.6 trillion won (10.09%) for credit card SBLs.

During 2003, domestic banks resolved or otherwise cleaned up SBLs totaling 31.7 trillion won—11.4 trillion won during the first half of the year and 20.3 trillion won in the second half. Loan write-offs came to 11.2 trillion won or 35.5% of the 31.7 trillion total in 2003, compared with 7.8 trillion won (38.5%) in 2002.

As of the end of 2003, Chohung and Kookmin were the only domestic banks whose SBL ratio exceeded 3%. The SBL ratio for nine banks rose while that for eight banks fell in 2003 (see the attached table for the complete list of the banks and their ratios for 2003). The FSS expects all domestic banks to be able to hold their SBL ratio below 3% for 2004 and plans to take supervisory actions to encourage banks to do so.

* Please refer to the attached PDF for details.