South Korean banks household loan growth slows in September

Household loans by South Korean banks grew at a slower pace in September than in the previous month due to slowed growth of mortgage lending and an absence of a one-off factor, the central bank said Wednesday. The Bank of Korea (BOK) said that the outstanding household loans extended by local banks, including home-backed and credit loans, reached 472 trillion won (US$439.8 billion) as of end-September, up 153.9 billion won from the previous month, according to South Korea's (Yonhap) News Agency. The growth of such lending slowed from a 1.9 trillion won on-month gain in August when demand for credit lending rose to cover spending for summer vacations. Banks' mortgage loans grew 302.1 billion won on-month to reach 321.5 trillion won as of September, slowing from an 800 billion won gain in August. If mortgage loans transferred to the state-run Korea Housing Finance Corp. are taken into account, household loans grew by 1 trillion won last month, slowing from a 2.8 trillion won on-month gain in August. Meanwhile, corporate lending by banks advanced 5.8 trillion won on-month to 626.7 trillion won in September, the BOK said. Bank lending to small and medium enterprises (SMEs) grew by 4.1 trillion won to 471.9 trillion won as local banks maintained their lenient lending attitude toward smaller firms. Banks' loans to larger companies gained by 1.8 trillion won to 154.8 trillion won last month, quickening from a 600 billion won on-month gain in the previous month as local banks provided liquidity to conglomerates undergoing corporate overhaul. The data came one day before the BOK holds its monthly rate-setting session. Analysts said that the BOK is expected to freeze the key rate at 2.5 percent for the fifth consecutive month in October.