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184229
Wed, 05/25/2011 - 05:59
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https://oananews.org//node/184229
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Household debt feared to pose threat to bank sector: report
SEOUL (Yonhap) - Accelerating growth of household debts poses a serious risk to South Korea's banking sector, a report said Wednesday, amid worries that massive household loans may hurt lenders' financial health.
"Accelerating growth of household debts could pose a risk to banks," the report by the Korea Center for International Finance said, citing a recent analysis released by global credit appraiser Moody's Investors Service.
South Korean households' financial debts reached 153 percent of their disposable income as of 2009 and the ratio expanded to 157 percent last year, the center said.
"About 30-40 percent of home-backed lending has been extended for consumption purposes other than housing costs, and that could possibly cause a trouble in the future," the center quoted Moody's as saying.
Moody's pointed out that the ratio of the country's household debt to gross domestic product ratio has also constantly grown since 2004 to date, the research center noted.
The report came as the country is set to unveil a package of measures aimed at slowing down growth of household debts as massive growth in household lending is feared to push up trouble loans at banks.
Local households held financial debts worth of 937.3 trillion won (US$856.8 billion) as of end-2010, up 8.9 percent from the previous year, according to the central bank.
The global credit firm pointed out the local bank sector's slower recovery from the fallout of the 2008 global financial crisis in comparison to their Asian peers in Hong Kong and Singapore, the center said.
"The Korean bank industry is showing a gradual recovery in profitability and asset quality," Moody's was quoted as saying. "But it's still lagging behind lenders in Hong Kong and Singapore, which have completely rebounded from the financial crisis to record strong credit growth last year."
"Accelerating growth of household debts could pose a risk to banks," the report by the Korea Center for International Finance said, citing a recent analysis released by global credit appraiser Moody's Investors Service.
South Korean households' financial debts reached 153 percent of their disposable income as of 2009 and the ratio expanded to 157 percent last year, the center said.
"About 30-40 percent of home-backed lending has been extended for consumption purposes other than housing costs, and that could possibly cause a trouble in the future," the center quoted Moody's as saying.
Moody's pointed out that the ratio of the country's household debt to gross domestic product ratio has also constantly grown since 2004 to date, the research center noted.
The report came as the country is set to unveil a package of measures aimed at slowing down growth of household debts as massive growth in household lending is feared to push up trouble loans at banks.
Local households held financial debts worth of 937.3 trillion won (US$856.8 billion) as of end-2010, up 8.9 percent from the previous year, according to the central bank.
The global credit firm pointed out the local bank sector's slower recovery from the fallout of the 2008 global financial crisis in comparison to their Asian peers in Hong Kong and Singapore, the center said.
"The Korean bank industry is showing a gradual recovery in profitability and asset quality," Moody's was quoted as saying. "But it's still lagging behind lenders in Hong Kong and Singapore, which have completely rebounded from the financial crisis to record strong credit growth last year."
