“Increase in debt speed is a danger level,” as financial authorities urgently conduct on-site inspections to understand the situation of household loans in the banking sector. With concerns growing over household debt as household loans at five major commercial banks increased to the highest level in three years last month, measures are being taken to address the situation.
The Financial Supervisory Service held a meeting with 17 domestic bank branch managers responsible for household debt, led by Vice Chairman Lee Jun-soo, to discuss management strategies for the second half of the year. Vice Chairman Lee emphasized the need for proactive management, stating, “We need to be prepared as the pace of household loan growth may accelerate in the latter half of the year.”
Starting from the 15th of next month, the Financial Supervisory Service plans to inspect the management status of household loans in the banking sector until the following month. Inspections will begin with banks experiencing rapid loan growth, and written inspections will also be conducted simultaneously. The authorities warned that they would take strict measures in response to any issues identified during the inspections.
During this inspection, the regulator will focus on areas such as the Debt Service Ratio (DSR) compliance, stress DSR regulation, and household loan management systems. Major banks have set their target growth rate for household loans this year at around 2-3%. As of the end of June this year, the outstanding household loans of the five major banks, including KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup, totaled 708 trillion won, an increase of 2.3% from the end of last year, indicating that they are close to reaching their target.
Banks have expressed their willingness to cooperate with the authorities’ policies. KB Kookmin Bank raised its prime lending rate by 0.13% starting from today, while Hana Bank increased the minimum fixed-rate prime lending rate by 0.157% since the 1st of last month.”