Lee Bok-hyun "Household Debt Manageable... Saemaeul Geumgo Anxiety Also Subsiding"

Increasing Trend but Stabilizing... GDP Ratio Expected to Remain Stable
Concerns Over Saemaeul Geumgo Bank Run Also Subsiding

Lee Bok-hyun, Governor of the Financial Supervisory Service, assessed that household debt is increasing but stabilizing within a manageable range. He also emphasized that the bank run triggered by Saemaeul Geumgo is being handled to the extent that there is no cause for concern.

On the 13th, Lee Bok-hyun made these remarks to reporters after the 'Win-Win Finance Agreement Ceremony' held at the Hanwha Life headquarters in Yeouido, Yeongdeungpo-gu, Seoul.

He explained, "In the case of last month, bank mortgage loans increased, but non-bank loans decreased, resulting in an overall increase of about 3.5 trillion won in household loans," adding, "Compared to the average monthly increase of 10 trillion won during 2020-2021, this is not a level to be overly worried about." He further stated, "When predicting the trend of household loans compared to the Gross Domestic Product (GDP), the growth rate of household loans relative to GDP is expected to be much lower," and added, "The proportion of problematic household loans related to variable interest rates is decreasing, so household loans are moving toward a manageable level."

He also addressed the Saemaeul Geumgo bank run incident. Governor Lee said, "Recently, the pressure that high interest rates and high inflation exert on the economy is significant, so cracks or ruptures inevitably occur in economically vulnerable areas," but added, "Fortunately, the public trusts and responds to the efforts of the government and authorities, so concerns about various bank runs that existed before last week are subsiding this week."

He emphasized that full efforts will be made to manage the insolvency of real estate project financing (PF). He said, "Since last year, the Financial Supervisory Service has been continuously devising management plans for individual projects through comprehensive site inspections and PF creditor group agreements, and there are also funding plans through policy finance," adding, "However, in the process, natural restructuring of some projects or construction companies may occur, but we will do our best to manage so that it does not spread into a financial system risk."

He also urged efforts to reflect the industry's difficulties regarding the application method of the new accounting standards for insurance companies. Governor Lee stated, "The most fundamental goal is to prevent confusion caused by accounting reasons rather than any substantive issues, or the recurrence of shaken public or consumer trust due to this," and added, "CEOs or CFOs may be tempted to improve short-term evaluations, but since we believe the system is rational and aligned in the mid to long term, we are discussing with insurance companies to ensure smooth implementation."

Financial Supervisory Service Governor Lee Bok-hyun is explaining the purpose at the win-win finance agreement ceremony held on the 13th at the Hanwha Life headquarters in Yeouido, Yeongdeungpo-gu, Seoul. (Provided by Financial Supervisory Service)

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