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South Korea’s share of firms unable to cover interest reaches 42.9 per cent

The Bank of Korea’s analysis of 2025 corporate results found that 42.9 per cent of interest-paying companies could not cover interest expenses from operating profit. That was the highest share since the comparable series began. Aggregate profitability improved, but median interest coverage fell and operating margins moved in opposite directions at large and smaller companies.

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Interest costs exceed operating profit at more firms

In South Korea, 42.9 per cent of companies incurring interest expenses could not cover those expenses from operating profit in 2025, according to the Bank of Korea’s annual corporate analysis. The share was 42.8 per cent a year earlier and reached its highest level since comparable data began in 2009.[1], [2]

The calculation covers 477,810 companies with interest expenses. Interest coverage divides operating profit by interest expense. Falling below 100 per cent means that operating profit is insufficient to cover the full interest bill; this measure alone does not establish a missed payment or default.[1]

The aggregate improves while the median falls

Combined interest coverage rose from 244.1 per cent to 292.7 per cent. The median nevertheless declined from 196.2 per cent to 194 per cent, its fourth consecutive annual fall. The share of companies reporting an operating loss increased from 33.9 per cent to 34.4 per cent.[1]

Operating margins diverge by company size

The overall operating margin increased from 4.6 per cent to 5.2 per cent. Large companies’ margin rose from 5.6 per cent to 6.7 per cent, while the small and medium-sized company margin fell from 3 per cent to 2.8 per cent. At small companies it declined from 1.8 per cent to 1.5 per cent. The figures concern annual financial results for 2025.[1]

References

  1. News sourceSeoul Economic DailyMore South Korean firms cannot cover interest from operating profit↩1↩2↩3↩4
  2. News sourceiNews24South Korean corporate interest coverage weakens for more firms↩
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