The delinquency rate on loans extended by South Korean banks fell in March as they cleared off more bad loans and added less fresh debts, the financial watchdog said Wednesday.

The combined delinquency rate of loans stood at 0.85 percent at the end of March, down 0.1 percentage point from a month earlier, according to the Financial Supervisory Service.

The decline came as banks wrote off more bad debts, worth 3.1 trillion won ($3 billion) as of end-March, compared with 1 trillion won in February, the FSS said.

The amount of fresh bad loans fell to 1.9 trillion won in March from 2 trillion won the previous month, it added.

The delinquency rate of both corporate and household loans dropped. The overdue rate for corporate loans decreased 0.1 percentage point to 1.02 percent, with household loans skidding 0.09 percentage point to 0.66 percent.

The outstanding amount of won-denominated loans came in at 1.18 quadrillion won as of end-March, up 2.1 trillion won from a month ago. (Yonhap)