Korean credit-card firms deeper in debt

Financial woes at South Korea's credit-card firms worsened last month, with overdue payments reaching an all-time high of 11.7 percent, data showed yesterday.

The ratio of payments overdue for more than a month at nine card firms rose to 11.7 percent at the end of last month from 10.9 percent a month ago, according to the Financial Supervisory Service (FSS).

The increase reflects a steady economic slowdown, it said, adding card firms also saw assets dwindling further last month due to stricter lending rules.

The financial watchdog, however, predicted the ratio would decrease in the second half of this year.

Concerns have been growing that credit-card firms could face difficulty in repaying debts, especially after this month.

A 5.6 trillion won (US$5.0 billion) bridge loan arranged by the government in April for card firms matures at the end of this month. They are also burdened with 21 trillion won in debts maturing in the second half.

In the first three months of this year, the total amount of bad loans at 1,527 financial institutions climbed to 33.3 trillion won from the previous quarter's 31.8 trillion won.

The FSS attributed the increase to mounting household debt and an accounting scandal involving SK Global.