S. Korean banks' household loans dip in Jan.

SEOUL, March 13 (Yonhap) -- South Korean banks' lending to households declined in
January as they strengthened risk management amid the sharply slowing economy,
the central bank said Friday.
Outstanding household loans by commercial banks and non-banking financial
institutions amounted to 512.7 trillion won (US$348.5 billion) as of the end of
January, down 3.3 trillion won from a month earlier, according to the Bank of
Korea (BOK).
The January decline was larger than an average 1 trillion won fall posted over
the past three years, it added.
"In January, household lending usually declines due to seasonal factors, but this
year, the slumping economy and banks' rigorous risk management led such loans to
sharply decrease," said Lee Sang-yong, an official at the BOK.
Local banks have been wary of expanding lending to households and smaller firms
as the slowing economy and a corporate overhaul drive are increasing the amount
of bad debt, compromising their financial health.
Home-backed loans by local banks expanded 1.8 trillion won on-month to 241.5
trillion won in January as relaxed real estate regulations prompted people to
borrow more, the BOK said.
On Thursday, the BOK froze its key interest rate at a record low of 2 percent
after six consecutive rate cuts, in a bid to gauge the effects of those
reductions on the economy and leave room to brace for a deeper economic downturn.
Between October and February, the bank had trimmed the rate by a total of 3.25
percentage points.
sooyeon@yna.co.kr
(END)