The bad loan ratio of local banks rose slightly in the first quarter of this year from three months earlier from an increase in fresh overdue debts, the financial watchdog said Tuesday.

The combined bad loan ratio stood at 1.81 percent at the end of March, up 0.02 percentage point from the previous quarter, according to the Financial Supervisory Service.

The bad loan ratio refers to the proportion of a bank’s nonperforming loans to their total lending. A debt that has been in arrears for more than 90 days and is at risk of default is considered an NPL.

Compared with a year earlier, banks’ bad loan ratio climbed 0.35 percentage point, the FSS said.

The higher on-quarter ratio comes from the banks adding more new loans than they cleared during the January-March period. They booked 5.2 trillion won ($5.08 billion) worth of NPLs on their balance sheets, while they wrote off a total of 4.3 trillion won in debt over the cited period.

The total amount of bad debts extended by 18 local banks reached 26.6 trillion won as of March, up 800 billion won from three months earlier, with 23.3 trillion won worth of corporate debts and 3.1 trillion won in household lending.

The bad loan ratio of corporate debts came to 2.38 percent as of end-March, down 0.01 percentage point from three months ago. The corresponding figure for household loans rose 0.05 percentage point to 0.65 percent over the cited period. (Yonhap)