Risky real estate development loans decline in Q2, financial watchdog reports

The Financial Supervisory Service disclosed that the stock of risky project-finance loans tied to real estate development dropped to 15.1 trillion won by the end of June, compared with 16.4 trillion won at the close of March. The figure now accounts for 9 percent of banks' overall 168.8 trillion won exposure to real estate development, a decline from 9.6 percent in the prior quarter. The regulator noted that the outstanding risky PF loans are slated for further restructuring.

Project-finance lending has been a persistent issue in the financial sector, with fears that deteriorating loans could threaten institutional health and broader market stability. The watchdog's data suggest a modest improvement in the risk profile of the sector.