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BOK’s debt hits W440 trillion-mark

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Published : 2014-03-20 15:08
Updated : 2014-03-20 15:19

The central bank’s debt level has risen to a new record high of more than 440 trillion won, while its net profit has fallen to the lowest in six years, data showed on Thursday.

The debt grew 3.1 percent to 448.4 trillion won ($417 billion) in December 2013, compared with 435 trillion won from a year earlier, according to the Bank of Korea.

The BOK data comes amid growing concerns about the country’s escalating public and household debts. The 2013 data also shows that the BOK’s debt had grown at a faster pace than that of households. 

The BOK’s debt saw a sharp 45.8 percent increase, up 140.9 trillion won, from 307.4 trillion won five years ago in late 2008, while household dept expanded 41.2 percent from 723.5 trillion won to 1021.3 trillion won during the same period.

The public sector debt, an index that includes both government liabilities and those of state-run companies, reached 908 trillion won at the end of 2013, up 4.2 percent or 36.9 trillion won on-year, according to the BOK data.

Analysts say the country’s mounting debt will put greater pressure on Lee Ju-yeol, the incoming Bank of Korea governor.

Lee will take over the governorship on April 1 after the incumbent, Kim Choong-soo, completes his four-year term. He pledged during his parliamentary hearing Wednesday that he would manage monetary policy to bring household debt under stricter control.

The central bank ended 2013 with a net profit of 2.07 trillion won -- nearly 47 percent less than the 3.8 trillion won it posted the year before. It is the weakest performance since 2007, when the BOK posted a deficit of 444.7 billion won.

The drop in net income and rise in liability was largely attributable to higher foreign exchange losses, in particular, due to the won’s gradual appreciation against the U.S. dollar, the BOK said.

A stronger won makes the value of assets in foreign currencies smaller when converted to the won. In 2013, the Korean won appreciated 1.4 percent against the greenback.

The largest portion of the central bank’s debt as of late 2013 was 163.6 trillion won in monetary stabilization bonds, which the central bank issued to absorb excess liquidity, followed by 129.8 trillion won in deposits from financial firms, 71.1 trillion won in other types of debt and 63.3 trillion won in banknotes.

 The other types of debt comprise collaterals such as cash the bank received in return for lending foreign currency-denominated securities.  

By Oh Kyu-wook and news reports (596story@heraldcorp.com)

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