(LEAD) S. Koreans more able to repay debt in Q2

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SEOUL, Sept. 14 (Yonhap) -- South Koreans were more able to repay their loans in
the second quarter than they have been in over a year, as a bullish stock market
bolstered their financial assets despite increased debt, the central bank said
Monday.

The ratio of individual financial assets to debt came in at 2.23 as of the end of
June, up from 2.16 three months earlier, according to the Bank of Korea (BOK).
The second-quarter figure marked the highest level since 2.26, seen in the first
quarter of 2008.
"Although home-backed lending increased, financial assets held by individuals
sharply rose due to rising share prices," Park Seung-hwan, head of the BOK's flow
of funds team, told a press conference.
As of end-June, financial assets held by individuals stood at 1,825.5 trillion
won (US$1.49 trillion), up 5.5 percent from three months earlier. Their debts
gained 2 percent on-quarter to 818.4 trillion won, the fastest growth since the
third quarter of last year, the BOK said.
Accordingly, net financial assets held by individuals, the difference between
financial assets and debt, reached 1,007.1 trillion won, up 8.6 percent from the
previous quarter and marking the first time that the figure has surpassed the
1,000-trillion won mark.
The second-quarter debt growth rate marked the sharpest pace since the BOK began
to compile related data at the end of 2002.
"The growth of individual debt quickened in the last quarter on rising mortgage
lending, but as home-backed lending rules were strengthened, debt growth may slow
down the road," Park added.
South Korea's stock prices rose 15.2 percent in the April-June period mainly due
to a revived appetite for risk among foreign investors hoping for an economic
recovery.
The country's financial regulator in early July toughened rules on bank mortgage
lending by allowing lenders to extend loans amounting to just 50 percent of the
value of a residence in Seoul and its adjacent areas, down from 60 percent.
Last week, the watchdog further stiffened rules on home loans, allowing banks to
lend solely based on borrower income.
Meanwhile, corporate debts inched up 0.7 percent on-quarter to 1,216.6 trillion
won as of the end of June, slowing from a 4.6 percent gain in the previous
quarter, the BOK added.
sooyeon@yna.co.kr
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