In the third quarter of last year, household surplus cash decreased by 3.5 trillion won compared to the previous quarter. This marks a second consecutive decrease. The increase in borrowing from financial institutions like mortgage loans and the seasonal factors influencing spending during the Chuseok holiday played significant roles.
According to the '2024 third quarter fund circulation (provisional)' released by the Bank of Korea on the 7th, the net fund operation size of households and non-profit organizations decreased from 41.2 trillion won in the second quarter last year to 36.7 trillion won in the third quarter. This represents a second consecutive decrease following a decline of 36.4 trillion won in the second quarter.
Net fund operation is the amount derived by subtracting loans from financial institutions (funding) from funds invested in deposits, bonds, insurance, and pension reserves. It is interpreted as the surplus funds available to economic entities. When funding exceeds the operation of funds, resulting in a negative surplus, it is expressed as net funding.
Although the scale of fund operation increased, net fund operation declined as funding saw a larger increase. In the third quarter of last year, the household fund operation scale was 57.6 trillion won, marking an increase of 1.9 trillion won compared to the previous quarter's 55.7 trillion won. In contrast, funding rose from 14.6 trillion won to 19.9 trillion won, an increase of 5.3 trillion won.
A Bank of Korea official noted, "The decline in household net fund operation is due to increased real investments in dwellings and other areas," adding, "The overlap of the summer vacation and the Chuseok holiday has also contributed to increased consumption."
The net funding scale for corporations (non-financial corporations) was 25.5 trillion won, an increase of 1.8 trillion won from the previous quarter's 23.7 trillion won. This is the highest net funding since the 26.5 trillion won reported in the third quarter of 2023. Compared to the previous quarter, the fund operation decreased by 8.1 trillion won to 11.9 trillion won, while funding was down by 6.3 trillion won to 37.4 trillion won.
The general government transitioned from net funding of 1.1 trillion won in the second quarter of last year to net fund operation of 18.7 trillion won in the third quarter. Although fund operation was reduced from 21.3 trillion won to 8.9 trillion won, this was significantly impacted by a reduction in funding from 22.4 trillion won to -9.7 trillion won. Fund operation declined as equity securities and investment funds decreased, while funding decreased due to the repayment of treasury bonds and borrowings from financial institutions.
In the third quarter of last year, the net fund operation size for the domestic sector, including households, corporations, and general government, was recorded at 36.5 trillion won, representing an increase of 23.5 trillion won compared to 13 trillion won in the second quarter of last year.
As of the end of the third quarter of last year, South Korea's financial assets in the non-financial sector (households, corporations, government) totaled 1 quadrillion 2105 trillion 1000 won. Financial liabilities were reported at 7652 trillion 3000 won, with net financial worth in the non-financial sector amounting to 4452 trillion 8000 won. The ratio of financial assets to financial liabilities was 1.58, a decrease of 0.02 from 1.60 in the previous quarter.