SEOUL, Nov 21: Loans and other credit owed by South Korean households rose 5.4 percent by the end of September from a year earlier, just below a 5.5 percent gain from three months before and staying relatively low, data showed on Thursday.
Credit growth was faster than the pace of expansion in Asia’s fourth-largest economy, which grew 3 percent last year in nominal terms, far slower than loan growth of around 9 percent seen in 2011 and more than 10 percent seen in 2007-2008.
The outstanding amount of loans and purchases on credit owed by South Korean households rose to 991.7 trillion won ($937.38 billion) by the end of September from 940.7 trillion won at the same time in 2012, central bank data showed.
Loans owed to financial institutions rose 5.9 percent to 937.9 trillion won as of the end of September whereas purchases on credit, such as credit-card transactions, declined 2.2 percent to 53.8 trillion won, the Bank of Korea’s quarterly data showed.
Outstanding household credit at end-September is equivalent to roughly 75 percent of South Korea’s gross domestic product, seen likely to exceed 1,300 trillion won this year.
The heavy debts households built up before the 2008 global financial crisis, most notably in a property investment boom during 2006 to 2008, have frequently been cited as a key risk to the local financial system.
Over the past several years the government has implemented various measures, such as administrative guidelines, intended to keep household debt from growing too fast. ($1 = 1057.9500 Korean won)
(AGENCIES)
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