According to South Korea's financial sector data, five regional banks—Gyeongnam, Gwangju, Busan, Jeonbuk, and Jeju—recorded non-performing loan (NPL) coverage ratios below 100% as of June 30, 2026. The banks' coverage rates stood at 74.39%, 83.01%, 85.34%, 90.59%, and 98.22%, respectively, all declining from year-end 2025 levels.

Non-performing loans at the five banks surged 16.6% in the first half, nearly three times faster than the 5.6% growth in total lending. The banks' NPL-to-total-loan ratio rose to 1.13% from 1.02%, indicating deteriorating credit quality amid regional financing expansion efforts. Small and medium-sized enterprises account for 54.2% of the banks' total lending portfolio.

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