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Risky real estate development loans dropped sharply in 2025: FSS

Published: 05 Apr. 2026, 14:57

The logo of the Financial Supervisory Service [FSS]

Outstanding loans extended to risky real estate development projects dropped sharply last year via sell-offs or recapitalization, the financial watchdog said Sunday.

According to the Financial Supervisory Service (FSS), 14.7 trillion won ($9.74 billion) in loans extended to real estate projects were classified as risky at the end of last year.

The reading marks a drop from 18.2 trillion won at the end of September, 20.8 trillion won at the end of June and 21.9 trillion won as of the end of March.

The December figure accounted for 8.4 percent of total exposure by financial institutions to real estate development at 174.3 trillion won, which also marks a drop from 11.5 percent at the end of March last year and 190.8 trillion won, respectively.

The remaining risky project-financing loans will be restructured as well, the watchdog said.

The loans have been one of the sticky issues in the financial market as a rise in soured loans, which started in late 2023, was feared to hurt financial institutions and the overall stability of the market.

Yonhap