Korea's household loan growth slows for 3rd month

SEOUL, Jan. 12 (Yonhap) -- Household lending growth slowed for the third
consecutive month in November as local financial institutions became increasingly
cautious amid a slowing economy, the central bank said Monday.

Outstanding household loans by commercial banks and non-banking financial
institutions amounted to 512.8 trillion won (US$378.3 billion) as of the end of
November, up 2.8 trillion won from a month earlier, according to the Bank of
Korea (BOK).
The figure was down from a 2.9 trillion won monthly gain the previous month.
Household loans in November increased by the smallest amount since January 2008
when such lending fell by 500 billion won, the BOK added.
"The growth of household lending eased for the third straight month as local
financial firms beefed up risk management," an official at the BOK said.
South Korean banks have become wary of lending to households and smaller firms as
the slumping economy and a credit crunch are increasing the number of defaults.
They are also struggling to boost their falling capital adequacy ratios, a key
barometer of financial soundness, by scaling back on loans and selling
subordinated bonds.
Home-backed loans by local banks expanded 1.77 trillion won on-month to 237.4
trillion won in November as relaxed real estate regulations prompted people to
borrow more, the BOK said.
On Friday, the BOK cut its key interest rate by half a percentage point to 2.5
percent in a move to bolster the slowing economy. The central bank has slashed
the policy rate by a combined 2.75 percentage points since October.
sooyeon@yna.co.kr
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