Debt Remains

 

The Financial Supervisory Service announced on Sept. 1 that the balance of outstanding loans provided in local currency by domestic banks increased by 5.8 trillion won (US$4.9 billion) from a month ago to reach 1.2955 quadrillion won (US$1.0992 trillion) as of the end of July this year.

The actual month-on-month increase added up to approximately 12 trillion won (US$10 billion), given a 6.2 trillion won (US$5.3 billion) increase in MBS securitization. The balance of household loans increased 1.1 trillion won (US$934 million) to 527.1 trillion won (US$446.8 billion) during the same period. The increment goes up to 7.3 trillion won (US$6.2 billion) when MBS securitization is taken into account.

Recently, the amount of household loans remains at a high level. Specifically, the amount reached 8.5 trillion won (US$7.2 billion) in April, 7.4 trillion won (US$6.3 billion) in May, and 8.2 trillion won (US$7.0 billion) in June. Under the circumstances, on Aug. 25 the Financial Supervisory Service asked the vice presidents of nine banks, including KB Kookmin, Shinhan, Woori, and Hana, to control their household loans more proactively.

It is said that the agency told them not to be immersed in household loans and focus more on business reform and the diversification of profit sources instead. In addition, it advised them not to incite the public ahead of the government’s household debt measures scheduled to become effective next year.

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