More house moves cause loans to rise in February

Korean banks’ household loans rose moderately in February from the previous month as more people moved to new homes, the central bank said yesterday.

Local banks’ household loans, including home-backed loans and credit loans, reached 452.7 trillion won ($402 billion) as of the end of February, up 500 billion won from a month earlier, according to preliminary data supplied by the Bank of Korea (BOK).

Lenders’ household loans rebounded in February after dipping by 2.8 trillion won in January as more people moved to new homes, offsetting banks’ attempts to rein in snowballing levels of debt, the BOK said in a statement.

The government and financial watchdog have been trying to put a lid on mounting household debts as heavy indebtedness threatens to squeeze private consumption, one of the economy’s two main growth engines.

Home-backed loans increased by 600 billion won last month from January, compared with an 800 billion won decline the previous month.

Korean banks’ corporate lending rose sharply on-month in February as mergers and acquisitions drove up lending to big corporations, the BOK said.

Corporate loans by local banks gained 5.1 trillion won on-month to 568.1 trillion won in February, with the pace of growth easing from a 6.9 trillion won gain in January, according to the central bank’s preliminary estimate.

Bank lending to large firms expanded sharply by 3.9 trillion won to 124.1 trillion won, due largely to SK Telecom requesting loans for its takeover of Hynix Semiconductor.

Loans to smaller firms grew by 1.1 trillion won to stand at 444 trillion won, it said.

The data was released one day before the central bank’s monthly rate-review meeting.

Analysts widely expect the BOK to keep the key interest rate unchanged at 3.25 percent for the ninth straight month as rising oil prices continue to stoke inflation fears. Yonhap