April 25, 2024
Economy
Non-bank loans hit record high in H1
[THE INVESTOR] Loans extended by savings banks, insurers and other non-banking institutions hit a record high in the first six months of the year, South Korea’s central bank said on Aug. 14.
The data compiled by the Bank of Korea showed that outstanding loans extended by non-banking financial companies reached 763.6 trillion won (US$671 billion) as of end-June, the highest since 1993, when the central bank began to compile related data.
The figure is a 5.4 percent, or 39.1 trillion won, rise from the end of last year.
It is widely believed that a growing number of people turned to non-bank lenders for mortgage and other loans as local banks tightened lending regulations.
The hike caused concerns, as non-banking financial institutions charge higher interest rates than banks, and lower-income people and self-employed individuals rely more on non-banking financial institutions.
Those who take loans from non-banking financial institutions could also face an increased debt burden if the central bank raises key interest rates.
In July, the BOK kept its policy rate at an all-time low of 1.25 percent, but it said that it may tighten monetary policy if the economy shows signs of a robust recovery, a comment widely seen as signaling a rate hike over the long haul.
As of end-March, South Korea’s overall household debt came to a record high of 1,360 trillion won, up 11.1 percent from 1,224 trillion won a year earlier.
By Alex Lee and newswires (alexlee@heraldcorp.com)
The data compiled by the Bank of Korea showed that outstanding loans extended by non-banking financial companies reached 763.6 trillion won (US$671 billion) as of end-June, the highest since 1993, when the central bank began to compile related data.
The figure is a 5.4 percent, or 39.1 trillion won, rise from the end of last year.
It is widely believed that a growing number of people turned to non-bank lenders for mortgage and other loans as local banks tightened lending regulations.
The hike caused concerns, as non-banking financial institutions charge higher interest rates than banks, and lower-income people and self-employed individuals rely more on non-banking financial institutions.
Those who take loans from non-banking financial institutions could also face an increased debt burden if the central bank raises key interest rates.
In July, the BOK kept its policy rate at an all-time low of 1.25 percent, but it said that it may tighten monetary policy if the economy shows signs of a robust recovery, a comment widely seen as signaling a rate hike over the long haul.
As of end-March, South Korea’s overall household debt came to a record high of 1,360 trillion won, up 11.1 percent from 1,224 trillion won a year earlier.
By Alex Lee and newswires (alexlee@heraldcorp.com)
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