Bank loans for real estate projects up 25.5 pct last year

SEOUL, Feb. 6 (Yonhap) -- Loans by local banks for real estate projects rose 25.5
percent last year, but growth slowed in the second half amid a slumping economy,
the financial watchdog said Friday.
As of the end of December, local lenders' loans to finance real estate projects
amounted to 52.5 trillion won (US$37.9 billion), compared with 41.8 trillion won
a year earlier, according to the Financial Supervisory Service.
Such loans increased 4.6 trillion won in the second half, slowing from a 6.1
trillion won expansion in the first six months, the watchdog said.
Smaller builders, which borrowed mostly from savings banks to buy property during
the 2005-2006 housing market boom, are now struggling to service debts taken out.
The delinquency rate for the loans reached 1.07 percent at the end of last year,
up 0.59 percentage point from the previous year as the real estate market slumped
and the funding for local builders deteriorated, it added.
"They account for a small portion of banks' total lending, but the credit risk
outlook remains weak amid worsening conditions at home and abroad," the watchdog
said.
In a separate report, the regulator said local savings banks' property loans
decreased in the fourth quarter as they were reluctant to expand such loans amid
the slowing economy.
The South Korean economy is slowing more sharply than expected amid tumbling
exports and weak domestic demand.
Asia's fourth-largest economy shrank 5.6 percent last quarter from three months
earlier, the sharpest fall since the Asian financial crisis a decade ago. The
International Monetary Fund predicted Tuesday the South Korean economy will
shrink 4 percent this year.
sooyeon@yna.co.kr
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