Banks’ credit management impacts the terms of lending, and diversification of loan portfolios and thus affects the total loan delinquency ratios. We find that the rising shares of recurring payment mortgages, one of the policy measures of restructuring mortgage loans since the second half of 2015, made positive contributions to banks’ asset management by improving credit management in the process of evaluating borrowers’ credits. Banks differentiated lending interests for mortgage borrowers even when their bank-issued credit ratings were the same in consideration of the differences in credit ratings that the credit bureaus (CB) issue. Using individual bank-level monthly data from September 2015 to May 2018, to explain the total loan delinquency ratios, we consider the banks' lending behavior on small and medium-sized enterprise (SME) loans, recurring payment mortgages, one-time payment mortgages, personal loans, and personal lines of credit. During the period, the Bank of Korea maintained its base interest rate between 1.25 percent and 1.75 percent and we focus on the share of high-interest loans (over five percent) for relatively low-credit borrowers. We also include the business cycle, return on financial asset (KOSPI), changes in the foreign exchange rate (KRW/USD), and real interest rate that could affect borrowers’ payment ability. We adopt the system-GMM estimation to correct bias caused by the problem of endogeneity as financial ratios can be affected simultaneously by the bank management. The system-GMM has some advantages over the fixed effect model since it deals with the omitted bias for some time-varying variables such as the CEO’s trait. Among fifteen commercial banks, nine banks experienced CEO turnovers during the period. Macroeconomic variables are significant determinants of the banks’ total loan delinquency ratios. A rise in economic activity, an increase in stock prices, and domestic currency depreciation against USD can positively impact bank asset quality. However, a rise in real interest rates can worsen bank asset quality. Banks’ total loan delinquency ratios could be varied by varying both the composition of the loan types and the credit structures of the banks’ loans. While the increase of high-interest loans for non-prime borrowers in new SME lending raised the total loan delinquency ratios, the increase of high-interest loans for non-prime borrowers in new recurring payment mortgages lowered the total loan delinquency ratios. This is due to the differences in the credit structures of non-prime borrowers of high-interest loans between SME loans and mortgage loans. Moreover, we analyze how the banks determine the lending interest rates for household loans and SME loans as it matters to asset quality. The Korea Federation of Banks provides the bank-issued credit ratings of household loan borrowers into five categories, from 1~2 grades at the top to 9~10 grades at the bottom as well as the CB credit ratings. The stages of bank-issued credit ratings of SME loans are 1~3 grades at the top, grade 4, grade 5, grade 6, and 7~10 grades at the bottom. For household loans, even when the bank-issued credit ratings are the same, we find a fair amount of heterogeneity in the lending interest rates depending on the differences in borrowers’ CB-issued credit ratings. This implies that banks’ credit management has improved since the second half of 2015. We especially focus on low-credit borrowers of mortgage loans whose bank-issued credit ratings are 7~10 grades. There exist noticeable differences in the borrowers’ CB credit ratings depending on the types of mortgage loans. For low-credit borrowers of high-interest mortgage loans, the average CB credit quality of the recurring payment mortgages is superior to that of the one-time payment mortgages. This explains the reason why the rising shares of high-interest recurring payment mortgage loans lowered the total loan delinquency ratios of commercial banks. Local banks are more active players in the process of this diversification than nationwide banks. For SME loans, the bank-issued credit ratings significantly affect the lending interest rates. When it comes to the credit qualities of borrowers, the default probabilities of the non-prime borrowers of SME loans are more widely distributed with higher upper and lower bounds than those of household loan non-prime borrowers. The average default rate is much higher in SME loans compared to household loans, which reinforces the importance of credit structures in bank-loan diversification and explains the reason why rising shares of high-interest loans in new SME loans worsened the bank asset quality. Improving the bank’s management efficiency in SME loans could benefit the banks as it provides some opportunities to improve banks’ asset quality in the process of bank-loan diversification in efforts to lower the risk level associated with their bank-loan portfolios. Banks adjust their lending interest rates in consideration of return on asset (ROA), costs, and other factors as well as borrowers’ credits. Our findings suggest that bank-loan portfolio diversification and efficient bank credit management together can reduce the bank’s total delinquency ratios.