Financial authorities will strengthen the management of bank household loans next year. We plan to check the loan status on a monthly and quarterly basis to prevent household loans from being concentrated at the beginning or first half of the year.
According to the financial sector on the 27th, it was reported that banks recently submitted next year’s household loan plan to the financial authorities.
In particular, banks plan to set separate monthly and quarterly targets for household loans. This is to prevent the possibility of using up all household loans for one year at the beginning or first half of the year.
In fact, as a result of the Financial Supervisory Service’s inspection, banks had already significantly exceeded the loans they had established for this year for this year in August.
As of August, Woori Bank’s loan performance reached 376.5% compared to the plan at the beginning of the year. This was followed by ▲Shinhan Bank at 155.7%, ▲Kookmin Bank at 145.8%, ▲Hana Bank at 131.7%, and ▲Nonghyup Bank at 52.3%.
Financial authorities believe that if the asset portfolio is concentrated in household loans, the soundness of banks will not only deteriorate, but will also have a negative impact on consumers as they will belatedly choose easy methods such as raising loan interest rates.
If household loans are properly managed on a monthly and quarterly basis, the incorrect lending practices of banks that hastily reduce loan limits only at the end of the year can disappear.
However, since this is an area that requires consultation with other ministries such as the Ministry of Land, Infrastructure and Transport and the Ministry of Strategy and Finance, including policy loans, it will take some time until the plan is finalized.
An official from the financial authorities said, “The direction is right, but it is still being discussed,” and “It has not been confirmed.”
Household loans, which have risen sharply since April of this year, are gradually decreasing towards the end of the year, but it is still considered a detonator for the domestic economy and the atmosphere cannot be reassured.
According to the report ‘Korean household debt status and risk analysis through comparison with major countries’ published by Woori Finance Research Institute, Korea’s household debt to gross domestic product (GDP) ratio increased from 99.2% in the third quarter of 2021 to 92% in the first quarter of this year. Although it is steadily declining, it is the fifth highest among major countries.
The research institute analyzed that in addition to common factors around the world such as home purchase and mortgage, the high proportion of self-employment and the jeonse system are unique factors in the Korean economy.
The proportion of household loans for home purchase in Korea is 60.2%, which is lower than the global average (66.8%), but this is also why the household debt-to-GDP ratio is high.
Regarding this, the research institute suggested, “As the increase in household debt in Korea reflects unique factors, it is necessary to evaluate risks by considering qualitative factors as well as comparing the total amount compared to major countries.”
(Seoul = Newsis)
Source: www.donga.com
