With the financial authorities expanding the target growth rate for the total volume of household debt from the previous 1.5% to around 3%, they are reportedly pushing a plan to differentiate additional limits by bank based on first-half household loans performance. Banks that exceeded their first-half household loans targets would be allocated smaller limits than other banks. Some banks that extended many household loans in the first half are still expected to face disruptions in lending operations.
According to the financial sector on the 13th, the financial authorities plan to set individual additional limits on household debt in consultation with each financial company. Although they have roughly doubled the target growth rate for the total volume of household debt, that does not mean they will uniformly double the limits for all financial companies, the financial authorities said.
The financial authorities are said to be planning to grant individual limits after reviewing each financial company's household loans performance. A financial authorities official said, "We will set limits for each financial company based on first-half household loans performance." This means financial companies that extended household loans above their first-half targets could receive smaller additional limits than other firms.
Financial companies that exceeded their household loans targets are concentrated mainly among banks. As of the 6th, the five major banks—KB Kookmin, Shinhan, Hana, Woori and NH NongHyup—had an outstanding household loan balance of 650.3766 trillion won, up 5.4005 trillion won this year. They have already exceeded the annual increase target of 4.33 trillion won by more than 1 trillion won. Among them, three are said to have already surpassed their annual household loans targets.
Even if the cap on total household loans is eased, it does not mean all banks will expand lending. In the financial sector, the view is that banks that sharply increased household loans in the first half will continue to control the pace of lending in the second half.