The ratio of delinquent loans at South Korean banks increased for a second consecutive month in May, driven primarily by a surge in newly soured credit.
The data, released Wednesday, indicates that credit quality is deteriorating across the banking sector as borrowers struggle with servicing costs.
This uptick in defaults arrives as financial conditions tighten for households.
South Korean banks raised the average interest rate on new mortgage loans in May, reversing a previous downward trend.
The combination of higher borrowing costs and rising delinquencies suggests that the burden of debt is intensifying for consumers, potentially weighing on future consumption and economic growth.
The deterioration in loan quality adds to broader concerns about the health of the country's financial system.