Banks' household loans up for 9th month in December, 2023 amid high rates
A banner shows information about a bank's loan programs in Seoul, Oct. 3, 2023. Yonhap
Household loans extended by banks in Korea rose for the ninth straight month in December, 2023 led by rising home-backed loans, central bank data showed Wednesday, amid worries that highly indebted households could pose a risk to Asia's fourth-largest economy amid high borrowing costs.
Banks' outstanding household loans had come to 1,095 trillion won ($829.5 billion) as of end-December, 2023 up 3.1 trillion won from a month earlier, according to the data from the Bank of Korea (BOK).
The December, 2023 gain decelerated from a 5.4 trillion-won rise the previous month but marked an on-month increase for nine months in a row, the data showed.
Banks' household loans increased 37 trillion won last year, a sharp turnaround from a decline of 2.6 trillion won in 2022. The 2023 tally also compares with a 71.8 trillion-won gain in 2021, according to the central bank.
Banks' home-backed loans rose 5.2 trillion won to 80.4 trillion won last month, decelerating from a 5.7 trillion-won on-month gain the previous month, while unsecured and other types of loans fell 2 trillion won to 243.3 trillion won over the cited period, according to the data.
Policymakers remained worried over a spike in household debts, which could sap further private spending amid a weak economic recovery.
Borrowing costs in Asia's fourth-largest economy remain high following the BOK's aggressive monetary tightening aimed at bringing surging inflation under control.
In November, 2023, Korea's central bank held its key interest rate steady at 3.5 percent for the seventh straight time amid a slowdown in growth and moderating inflation.
This marked the seventh straight time that the BOK has stood pat following rate freezes in February, April, May, July and August, 2023. The rate freezes came after the BOK delivered seven consecutive rate hikes from April, 2022 to January, 2023.
Banks' loans to companies fell 5.9 trillion won last month, with bank loans extended to firms rising 77.4 trillion won last year, down from a 104.8 trillion-won rise, the data showed. (Yonhap)