Bank chiefs see slowing household debt

[THE INVESTOR] Household debt increase rate will drop during the second half of the year, the chiefs of South Korean commercial banks said on July 21.

Speaking at a meeting with Bank of Korea Gov. Lee Ju-yeol, they forecast a drop in the rate due to the efforts made by the government and banks.

Saying that the effects of the measures rolled out by the financial authorities and the banks’ risk management will start to show during the second half despite the rapid increase seen during the first six months of the year.

According to BOK data, South Korea’s household debt jumped more than 36 trillion won (US$31.70 billion) during the first five months of the year. The rate of increase is higher than that recorded in the same period last year, in stark contrast to the government’s projections that the rate of increase will drop.

The top bankers also said that the banks financials remain relatively healthy, but that efforts to streamline operations such as cost cutting must be strengthened. They also said that risks surrounding loans to SMEs were rising, and that SMEs need to be prompted into taking restructuring measures.

By Choi He-suk (cheesuk@heraldcorp.com)