S. Korea`s household credit rebounds in Q2

SEOUL, Aug. 25 (Yonhap) -- South Korea's household credit rebounded in the second
quarter as home-backed loans increased and improving consumer confidence boosted
card spending, the central bank said Tuesday.
As of the end of June, outstanding household credit stood at 697.7 trillion won
(US$560.6 billion), up 14.1 trillion won or 2.1 percent from three months
earlier, according to the Bank of Korea (BOK).
Household credit refers to credit purchases and loans for households extended by
financial institutions, including commercial lenders and mutual savings banks.
Korea's household credit fell for the first time in more than five years in the
first quarter mainly because individuals cut back on card spending amid a
slumping economy.
"Financial firms extended more mortgage loans. Amid improving consumer sentiment,
tax benefits for car purchases also increased households' credit purchase," Lee
Sang-yong, an official at the BOK said.
Household lending extended by local financial institutions reached 661.5 trillion
won as of the end of June, up 13.8 trillion won from three months earlier, the
central bank said. Home-backed loans by banks amounted to 254.4 trillion won, up
7.1 trillion won from the previous quarter.
Credit purchases added 271.4 billion won on-quarter to 36.2 trillion won as more
people bought cars to get tax benefits in advance.
The data came as the South Korean economy grew 2.3 percent in the second quarter
from three months earlier, the fastest expansion in more than five years, thanks
to a set of economic stimulus measures.
According to the BOK, in the second quarter, private spending picked up as sales
of cars increased due to tax benefits and exports of petrochemical goods remained
robust.
On Aug. 11, the BOK froze the key interest rate at a record-low of 2 percent for
the sixth straight month. BOK Gov. Lee Seong-tae cast a more upbeat view on the
economy, suggesting that the bank is mulling the timing of a possible rate hike.
sooyeon@yna.co.kr
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