This year, the arrears rate on overdraft accounts (hereafter overdrafts) at major commercial banks has been rising, led by those in their 20s and younger and those 60 and older. Investors who engaged in the domestic stock market "debt investing" suffered losses amid a market correction, which appears to have led to higher arrears rates among younger people and seniors, who have relatively lower incomes.
According to data received from the Financial Supervisory Service by Lee Jong-uk of the People Power Party on the 9th, the arrears rate on overdrafts at the five major banks — KB Kookmin, Shinhan, Hana, Woori, and NH NongHyup — was 0.22% at the end of June, up 0.04 percentage points from the end of last year (0.18%).
The overdraft balance at the five major banks rose 8.5%, from 3.99 trillion won at the end of last year to 4.33 trillion won at the end of June. During the same period, the amount in arrears jumped 33.2%, from 71.1 billion won to 94.7 billion won. Among overdraft balances, those in their 40s held the most at 1.57 trillion won (36.3%), followed by those in their 50s (30.7%), 30s (20.3%), 60 and older (10.4%), and 20s and younger (2.3%).
Among those 60 and older, the overdraft arrears rate was 0.37% at the end of June, the highest among all age groups. The arrears rate for those in their 20s and younger followed at 0.33%. The arrears rates for these age groups were also high in overall unsecured loans, including overdrafts. As of the end of June, the arrears rate for unsecured loans was highest among those in their 20s and younger at 0.67%, followed by those 60 and older at 0.59%. The two age groups far exceeded the overall arrears rate (0.35%). For younger people and seniors, who have relatively lower incomes, losses from falling stock prices are presumed to have increased the burden of interest repayment.
Seniors also had the largest amount borrowed from securities firms against stocks as collateral. As of the end of May, among 2.9027 trillion won in securities-backed loans executed using the top five market-cap stocks — Samsung Electronics(005930)·SK hynix(000660), SK Square(402340) — at 10 domestic securities firms, those 60 and older accounted for the most at 1.8283 trillion won (63%).
Lee Jong-uk said, "The bill for debt investing built up during the stock market overheating is arriving first for younger people and seniors," and added, "Authorities should immediately review the system risk of leveraged investing and the soundness of vulnerable borrowers and draw up countermeasures."