S. Koreans' ability to repay debt improves in Q1

By Kim Soo-yeon
SEOUL, June 12 (Yonhap) -- South Koreans' debt-repayment ability improved in the
first quarter as a bullish stock market increased their financial assets amid
stagnant debt growth and weak spending, the central bank said Friday.

The ratio of financial assets to debt held by individuals, which gauges their
capacity to redeem debts with assets, came in at 2.16 as of the end of March, up
from 2.09 three months earlier, according to the Bank of Korea (BOK).
"Korean individuals' financial assets rose last quarter mainly because rising
share prices increased valuation gains of their stock investments," Park
Seung-hwan, head of the BOK's flow of funds team, told a press conference.
As of the end of March, individual debt reached 802.5 trillion won (US$642.3
billion), up 0.1 percent from three months earlier. Financial assets owned by
individuals gained 3.1 percent on-quarter to 1,729.7 trillion won, it added.
South Korea's stock prices rose 7.27 percent in the first quarter after tumbling
about 24 percent in the final quarter of 2008 in the wake of the collapse of
Lehman Brothers.
Meanwhile, corporate debts advanced 8.7 percent on-quarter to 882.4 trillion won
as of end-March as more companies sold bonds to secure funds, the BOK said.
In the first quarter, the total size of funds supplied by the local financial
sector expanded by 51.2 trillion won, compared with a 16.5 trillion won advance
the previous quarter. Although local financial firms cut back on lending, they
expanded buying of corporate and government bonds last quarter, the BOK added.
Local lenders have been wary of extending loans to households and smaller firms
as the slowing economy and the credit crunch are increasing the amount of bad
loans, compromising their financial health.
sooyeon@yna.co.kr
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