Koreans' credit binge has caused trouble for issuers

Credit card firms lost $1.3bn in the three months to September, with 11.2% of loans overdue by more than a month.

The growing mound of problem loans has combined with a slowdown in new lending, partly under pressure from the government to cool the market down.

Only last month LG Card, the country's biggest issuer, almost went bust under the weight of its debts.

LG secured an agreement on Tuesday with its creditors to extend payment periods on most of its 20 trillion won ($17bn; �10bn) borrowings.

Slowdown

The new figures suggest that LG may not be alone in its troubles, triggered by rampant lending without sufficient credit controls.

Cards had been promoted as a means of cutting down the cash economy and its associated high levels of tax avoidance.

The 1.55 trillion won ($1.3bn) loss made by eight credit card firms compares with a 255bn won profit in the same period last year.

The Financial Supervisory Service, South Korea's financial watchdog, was at pains to stress that bad debts were falling in absolute terms - just as the Finance Ministry insisted that the economy was in recovery.

But with new lending slowing, they are occupying a greater and greater chunk of overall credit card debt.