Record high KRW 1360 trillion household debts despite of decreased increase range
Moon Hae Won | hmoon3@ | 2017-05-24 12:13:31
Household debt of Korea has risen more than KRW 17 trillion in the first quarter this year. As the financial authorities tightened the household loans, the range of increase was smaller than last year. However, the balance is again the record high.
According to the Bank of Korea (BOK) on May 23, household credit (household loans and sales credit) at the end of the first quarter has grown 1.3 % (KRW 17.1 trillion) from the previous quarter to KRW 1359.7 trillion. The figure increased by KRW 136 trillion (11.1%), which is 11% since 1st quarter last year compared to the same period of last year.
Household credit is a representative example of household debt. The household credit is the sum of household loans received from financial institutions such as banks, insurance companies, lenders, and public financial institutions, as well as the amount of credit card used before payment (credit for sales). The household loans increased up to KRW 16.8 trillion and sales credit increased by KRW 300 billion among them.
The BOK explained that household debt growth, in the first quarter, is small due to a decrease in demand for moving assets and bonuses at the end of the year. Moon So-sang, head of the Financial Statistics Team at BOK, said, "The decrease in the amount of household debt in the first quarter of this year was lower than the previous quarter due to the seasonal effect. We are seeing clear slowdown compared to the same period last year."
However, the household debt growth was the second largest ever as of the first quarter of this year. It is pointed out that the effectiveness of the household debt restoration measures is not great despite the financial authorities have extended the guidelines for credit review, which had been applied only to banks and insurance companies in March, to the entire financial sector. Those who had difficulties in getting loans from banks seem to have had a so called `balloon effect` in which they seek the second financial sector. The balance of non-bank deposits, including savings banks, increased by KRW 7.4 trillion to KRW 298.6 trillion in the first quarter of this year. The increase is similar to the first quarter of last year (KRW 7.6 trillion).
The bank of deposit`s outstanding balance of household loans is KRW 618.5 trillion, which is in sharp contrast with the KRW 1 trillion increase in the first quarter of last year (KRW 5.6 trillion).
The balance of mutual savings banks among non-bank depositors` household loans increased up to KRW 1,183.3 billion in the first quarter to KRW 19.3 trillion. Low-income and low-credit households are likely to find savings banks with high interest rates. Mutual financing grew to KRW 174.38 billion, KRW 2.983 trillion, while the Saemaeul Bank increased to KRW2.5 trillion and the credit cooperatives increased up to KRW 835.3 billion. The increase in the amount of mortgage loans by non-bank deposits agencies was KRW 4.2 trillion, doubling from the previous year amount (KRW 2.1 trillion). Experts predict that household debt will shrink private consumption and hinder economic growth in the long run.
Mr. Moon pointed out, "The growth rate of the banknotes has been slowed down since last year due to the strengthened management of group loans, while the non-bank deposits are similar to those of last year due to the transfer of demand from banks."
By Moon Hae Won hmoon3@
[ copyright ⓒ The Digitaltimes ]
According to the Bank of Korea (BOK) on May 23, household credit (household loans and sales credit) at the end of the first quarter has grown 1.3 % (KRW 17.1 trillion) from the previous quarter to KRW 1359.7 trillion. The figure increased by KRW 136 trillion (11.1%), which is 11% since 1st quarter last year compared to the same period of last year.
Household credit is a representative example of household debt. The household credit is the sum of household loans received from financial institutions such as banks, insurance companies, lenders, and public financial institutions, as well as the amount of credit card used before payment (credit for sales). The household loans increased up to KRW 16.8 trillion and sales credit increased by KRW 300 billion among them.
The BOK explained that household debt growth, in the first quarter, is small due to a decrease in demand for moving assets and bonuses at the end of the year. Moon So-sang, head of the Financial Statistics Team at BOK, said, "The decrease in the amount of household debt in the first quarter of this year was lower than the previous quarter due to the seasonal effect. We are seeing clear slowdown compared to the same period last year."
However, the household debt growth was the second largest ever as of the first quarter of this year. It is pointed out that the effectiveness of the household debt restoration measures is not great despite the financial authorities have extended the guidelines for credit review, which had been applied only to banks and insurance companies in March, to the entire financial sector. Those who had difficulties in getting loans from banks seem to have had a so called `balloon effect` in which they seek the second financial sector. The balance of non-bank deposits, including savings banks, increased by KRW 7.4 trillion to KRW 298.6 trillion in the first quarter of this year. The increase is similar to the first quarter of last year (KRW 7.6 trillion).
The bank of deposit`s outstanding balance of household loans is KRW 618.5 trillion, which is in sharp contrast with the KRW 1 trillion increase in the first quarter of last year (KRW 5.6 trillion).
The balance of mutual savings banks among non-bank depositors` household loans increased up to KRW 1,183.3 billion in the first quarter to KRW 19.3 trillion. Low-income and low-credit households are likely to find savings banks with high interest rates. Mutual financing grew to KRW 174.38 billion, KRW 2.983 trillion, while the Saemaeul Bank increased to KRW2.5 trillion and the credit cooperatives increased up to KRW 835.3 billion. The increase in the amount of mortgage loans by non-bank deposits agencies was KRW 4.2 trillion, doubling from the previous year amount (KRW 2.1 trillion). Experts predict that household debt will shrink private consumption and hinder economic growth in the long run.
Mr. Moon pointed out, "The growth rate of the banknotes has been slowed down since last year due to the strengthened management of group loans, while the non-bank deposits are similar to those of last year due to the transfer of demand from banks."
By Moon Hae Won hmoon3@