Seoul - XINHUA
Household loans extended by South Korean insurers continued to rise over the past year as people increased their reliance on insurers for loans following the regulator's restriction on bank lending, data by the financial watchdog showed Tuesday.
Debts owed by households to insurance companies reached 72.9 trillion won (64.23 billion U.S. dollars) as of the end of June, up 14 percent from 63.8 trillion won a year earlier, according to the Financial Supervisor Service (FSS).
Insurance contract loans, which take refund on the contract cancellation as collateral, expanded to 44.6 trillion won as of end-June from 39.3 trillion won a year before. Home-backed loans increased from 19.4 trillion won to 21.9 trillion won over the cited period, with credit loans growing from 4.3 trillion won to 4. 7 trillion won.
South Korean households raised their dependence on insurers for mortgage loans and credit loans after the financial regulator tightened rules on banks' household lending. The regulator introduced comprehensive countermeasures against excessive household debts in the banking sector last June, boosting shift of loan demand from banks to non-banking financial institutions such as insurers.
The ratio of mortgage loans overdue for more than one month stood at 0.6 percent of the total as of end-June, up 0.03 percentage point from a month earlier, according to the FSS. The ratio was sharply up from 0.43 percent at the end of September last year, boosting concerns over households' debt-servicing capabilities.
Meanwhile, corporate loans extended by insurers amounted to 33. 2 trillion won as of the end of June, up from 27.6 trillion won a year before, according to the FSS. Loans to small- and mid-sized enterprises (SME) increased to 22.6 trillion won as of end-June from 18.5 trillion won the previous year, with real estate project- financing loans rising from 5.1 trillion won to 5.9 trillion won over the same period.
The delinquency ratio of corporate loans fell 0.03 percentage point on-month to 1.46 percent at the end of June. The default rate for SME loans declined 0.03 percentage point to 2.11 percent over the cited period, with the one for property-related loans sliding 0.03 percentage point to 6.24 percent.