Overdue loans double at South Korea’s industrial hubs

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Overdue corporate loans at five of South Korea’s major industrial complexes more than doubled in the first eight months of 2026, highlighting mounting financial pressure on…

Overdue corporate loans at five of South Korea’s major industrial complexes more than doubled in the first eight months of 2026, highlighting mounting financial pressure on manufacturers struggling with higher borrowing costs, rising wages and raw material prices, and intensifying competition from China.

According to Financial Supervisory Service data obtained by Rep. Seo Il-jun of the People Power Party, overdue corporate loans at six major banks operating in the Banwol, Sihwa, Namdong, Changwon and Gumi national industrial complexes reached 108.2 billion won ($80.9 million) at the end of August, up from 52.8 billion won at the end of 2025.

The delinquency rate doubled from 0.12 percent to 0.24 percent over the same period, raising concerns that financial distress among small and medium-sized manufacturers could lead to further deterioration in banks’ asset quality.

The six lenders are KB Kookmin Bank, Shinhan Bank, Hana Bank, Woori Bank, NH NongHyup Bank and Industrial Bank of Korea.

A nonferrous metals manufacturer in Incheon’s Namdong industrial complex borrowed money from a bank to finance raw material purchases after commodity prices surged.

But falling sales, driven partly by competition from low-cost Chinese products, weakened the company’s financial position.

“With interest rates rising sharply recently, we are struggling even to make interest payments on our loans,” a company official said.

A commercial bank official at the Gumi industrial complex in North Gyeongsang Province said most manufacturing industries outside semiconductors were facing difficulties because of weak domestic demand and growing competition from Chinese companies.

The downturn is also evident in production, exports and employment figures.

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