Individual Debt Hits Record on Stock Investment
By Lee Hyo-sik
Staff Reporter
The country's per-capita debt rose to an all-time high of 14.5 million won ($15,700) in the second quarter as more people borrowed money to invest in stocks to capitalize on the bullish market runs at home and abroad.
The Bank of Korea (BOK) reported Thursday that the combined debt individuals owed to financial institutions stood at 699 trillion won as of the end of June, up 2.7 percent from 681 trillion won three months earlier. The debt rose 1.5 percent in the first quarter from the previous three-month period.
Divided by the country's 48.3 million population, per-capita financial debt reached 14.5 million won in the second quarter, up 300,000 won from the previous quarter.
``More individuals tapped commercial loans to invest in stocks, while refraining from taking out housing loans amid the sluggish housing market,'' a BOK official said.
He also said the higher level of individual debt does not necessarily mean households are exposed to greater default risks because they have increased financial assets as well.
The combined individuals' financial assets increased 6.8 percent to 1,633 trillion won at the end of June from 1,529 trillion won three months ago as more people shifted funds from the real estate market to purchase equity funds and other financial products.
The central bank said individuals' ability to pay back debts improved as the ratio of individuals' assets to debt rose to a record high of 2.34 during the second quarter from 2.25 in the previous quarter.
Meanwhile, companies borrowed more money during the April to June period as they expanded plants and other corporate facilities on expectation that the economy would improve in the second quarter on strong exports and rebounding domestic consumption.
Also, firms needed to raise more funds as rising oil prices and weakening price competitiveness of their products overseas amid a strong won have chipped away at their earnings.
Domestic companies borrowed a total of 53.9 trillion won in the second quarter, the largest quarterly figure since the BOK began compiling the data.