Households struggling to repay debtThe delinquency ratio of household debt in Korea climbed in 2012 from a year earlier, largely due to the persisting economic slowdown, the financial regulator said yesterday.
The overdue debt ratio for household lending extended by 18 local banks came in at 0.81 percent as of the end of December, up 0.14 percentage point from 0.67 percent recorded the previous year, according to the data by the Financial Supervisory Service (FSS).
The regulator attributed the rise in delinquent household debts to an increase in overdue mortgage and credit loans, as the sagging economy has crimped households’ balance sheets.
The watchdog’s data came amid growing concerns over the country’s high levels of household debt. The country’s outstanding household loans stood at 937.5 trillion won ($882.7 billion) as of the end of September last year, tantamount to more than 70 percent of Korea’s GDP for 2011.
The financial authorities have been ramping up efforts to stem the rising debt, imposing local lenders to help troubled borrowers restructure their repayment plans by offering a lower rate and a longer maturity period.
Curbing the household debt is one of the main tasks for President-elect Park Geun-hye, who proposed setting up a public fund worth 18 trillion won during her campaign as a solution to bring the debt level down.
Amid the protracted global downturn, banks have lowered their growth rate target for household lending in 2013 to 1.9 percent from 2.7 percent the previous year, the FSS added.
Meanwhile, the delinquency ratio of banks’ corporate loans also rose 0.08 percentage point to 1.18 percent in 2012, led by a gain in overdue debt rates of large firms, according to the data.
The outstanding amount of banks’ household lending stood at 464.5 trillion won as of end-2012, with the corresponding figure for corporate loans coming in at 618.1 trillion won in the same period, according to the regulator. Yonhap
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