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Banks' household loans grow at slower pace in Aug.

A citizen passes by a row of ATM machines in Seoul. (Yonhap)
A citizen passes by a row of ATM machines in Seoul. (Yonhap)
South Korean banks' household loans grew at a slower pace in August from the previous month due largely to slowed growth in overdrafts for stock investments, central bank data showed Wednesday.

Outstanding bank loans to local households came to 1,046.3 trillion won ($898 billion) as of end-August, up 6.2 trillion won from the previous month, according to the data from the Bank of Korea (BOK).

The August reading slowed from a 9.7 trillion won on-month increase in July, the data showed.

The BOK said the loan growth slowed as people repaid unsecured lending taken out to subscribe for initial public offerings of several firms.

Unsecured and other non-mortgage loans grew by 300 billion won to 281.1 trillion won, compared with an on-month gain of 3.6 trillion won in July.

In August, demand for banks' home-backed lending still remained solid despite tightened lending rules.

Banks' mortgage loans expanded by 5.9 trillion won on-month to 764.2 trillion won. This marked the fourth-largest on-month gain for any August since 2004 when the BOK began compiling related data.

Since July, the financial regulator has applied stricter lending calculation for mortgage loans, called the debt service ratio, in a bid to curb household debt.

Household loans extended by banks and financial institutions grew 8.5 trillion won in August, slowing from a 15.3 trillion won on-month gain in July, according to separate data by the Financial Services Commission.

In August, the BOK raised the benchmark interest rate last month by a quarter percentage point to 0.75 percent from a record low of 0.5 percent, marking the first pandemic-era rate hike.

BOK Gov. Lee Ju-yeol hinted the central bank may again raise the key rate this year or early next year. (Yonhap)
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