SEOUL, Sept. 2 (Xinhua) -- Bad loan ratio of South Korean banks rose in July as local lenders reduced write-offs on bad debts despite a rise in fresh loan delinquencies, financial watchdog data showed Monday.
The rate of bad loans overdue more than one day was 1.06 percent as of the end of July, up 0.08 percentage point from a month earlier, according to the Financial Supervisory Service (FSS) .
Banks cleared overdue loans worth 1.4 trillion won (1.27 billion U.S. dollars) in July, down from 5.4 trillion won in write- offs in the prior month. Fresh delinquent loans increased 2.3 trillion won in July, up 0.2 trillion won from a month earlier.
The delinquency ratio for corporate loans rose 0.09 percentage point from a month earlier to 1.18 percent as of end-July, and the figure for household loans gained 0.07 percentage point to 0.93 percent over the same period.
The FSS said that the bad loan ratio rose in July due to low base effect caused by massive loan resolution in the prior month, noting that the July figure was down 0.3 percentage point from a year ago.
The watchdog, however, cautioned that visible possibility for the end of U.S. quantitative easing boosted foreign capital flows in and out of emerging economies, saying that it could have a negative impact on local industries sensitive to external conditions.