The ratio of bad loans extended by South Korean banks rose in the third quarter from three months earlier, largely due to a decrease in bad debt clearance, the financial regulator said Wednesday.

The ratio of non-performing loans held by 18 local banks came to 1.56 percent as of the end of September, up 0.07 percentage point from 1.49 percent tallied as of end-June, according to the Financial Supervisory Service.

The bad loan ratio had dropped to as much as 1.36 percent at the end of last year, before it climbed back to 1.51 percent in the first quarter of this year.

The on-quarter gain in the bad loan ratio came as the amount of bad debt cleared by banks sharply declined to 4.8 trillion won ($4.4 billion) in the July-September period, compared with 7.0 trillion won the previous quarter, mainly dented by the economic slowdown, the FSS said.

“The bulk came from the non-performing loans in the property financing,” said an FSS offical.

The bad loan ratio for corporate debts gained to 1.93 percent from 1.84 percent over the cited period. The corresponding figure for property financing stood at 11.24 percent as of end-September. (Yonhap News)