Saturday, November 23, 2019
Local Financial Authorities Jointly Looking into Household Debts
Increased Household Debt
Local Financial Authorities Jointly Looking into Household Debts
  • By Jung Suk-yee
  • June 7, 2017, 03:15
Share articles

The outstanding household loans provided by the five largest commercial banks in Korea increased to 499.6917 trillion won (US$449 billion) in April and to 502.7911 trillion won (US$452 billion) in May.
The outstanding household loans provided by the five largest commercial banks in Korea increased to 499.6917 trillion won (US$449 billion) in April and to 502.7911 trillion won (US$452 billion) in May.

 

With the amount of loans provided by local commercial banks soaring to add to the instability of the local real estate market, the Bank of Korea and the Financial Supervisory Service are jointly looking into household debts in Woori Bank, KEB Hana Bank, NH Nonghyup Bank and so on In KEB Hana Bank, the amount of outstanding household loans increased by no less than one trillion won in May this year alone. The increment amounted to approximately 750 billion won (US$675 million) and 190 billion won (US$171 million) in NH and Woori, respectively.

The outstanding household loans provided by the five largest commercial banks in South Korea had edged down from 498.2034 trillion won (US$448 billion) to 497.8906 trillion won (US$448 billion) between January and February this year. However, the total amount increased again to 499.6917 trillion won (US$449 billion) in April and to 502.7911 trillion won (US$452 billion) in the following month. A significant increment is predicted this month as well with a large number of reconstruction and redevelopment projects scheduled for May and this month in the regions including Seoul.

The two organizations are looking into personal loans for the self-employed, too. According to the Bank of Korea, this amount totaled 480.2 trillion won (US$432 billion) at the end of last year. However, the Financial Supervisory Service is estimating it at approximately 670 trillion won (US$603 billion). The former’s calculation consists of individual businesses’ loans and the household loans of the self-employed that have the individual businesses’ loans. The latter’s also includes the household loans of the self-employed that have taken out loans for individual businesses at least once.

Last year, loans for self-employed businesses played an important role to boost household loans with the debt-to-income (DTI) ratio threshold adjusted from 50% to 60%. According to the central bank, the loans for individual businesses jumped from 209.3 trillion won (US$188 billion) to 268.1 trillion won (US$241 billion) between the end of 2014 and the end of April this year. Likewise, the outstanding individual loans at the five largest local banks increased by no less than 1.4290 trillion won (US$1.28 billion) from 184.0146 trillion won (US$165 billion) to 185.4436 trillion won (US$166 billion) between April and May this year.