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A pedestrian passes by a local bank in Seoul advertising its loan product, in this photo taken on Feb. 11. (Yonhap) |
Household loans extended by banks in South Korea shrank for the third straight month in February as the central bank delivered a series of interest rate hikes to rein in inflation and household debt, central bank data showed Thursday.
Outstanding bank loans to households came to 1,060.1 trillion won ($865.4 billion) as of the end of February, down 100 billion won from the previous month, according to the data from the Bank of Korea (BOK).
This marked the third straight month that the banks' household loans have declined on-month following a 200 billion-won fall in December last year.
It also represented the first time since the central bank started to compile related data in 2004 that banks' household loans have declined for three straight months.
"Interest rate hikes, bank's tougher rules on making loans, coupled with authorities regulations on lending have combined to have an impact" a BOK official said.
The central bank has raised its key policy rate three times for a combined 0.75 percentage-point hike since August to tame inflation and household debt.
In tandem with the BOK's hawkish stance, local banks have also tightened rules on lending.
Banks' mortgage loans grew 1.8 trillion won on-month to 782.8 trillion won in February, but other lending, mostly unsecured loans, fell 1.9 trillion won over the cited period to 276.1 trillion won, the data showed.
According to separate data provided by the Financial Services Commission and the Financial Supervisory Service, household loans extended by banks and other non-banking financial institutions declined around 200 billion won in February from a month earlier.
Their home-backed loans expanded 2.6 trillion won on-month in February, while unsecured and other loans fell 2.9 trillion won, the data showed. (Yonhap)
