S Korean insurers' household loans grow

SEOUL - Household loans extended by South Korean insurers grew in April as people increased their reliance on insurers for loans following the regulator's restriction on bank lending, the financial watchdog said Monday.

Debts owed by households to insurance companies reached 72.4 trillion won ($62.47 billion) as of the end of April, up 0.48 percent from a month earlier, according to the Financial Supervisory Service (FSS).

Insurance contract loans, which take refund on the contract cancellation as collateral, expanded 0.54 percent on-month to 44 trillion won in April, while mortgage loans increased 0.55 percent to 22.1 trillion won over the same period.

South Korean household raised their dependence on insurers for home-backed loans and credit loans after the financial watchdog tightened rules on banks' household lending. The watchdog introduced comprehensive countermeasures against excessive household debts in the banking sector last June, boosting shift of loan demand from banks to non-bank financial institutions such as insurers.

Corporate loans extended by insurers advanced 0.55 percent on- month to 31.8 trillion won in April, according to the FSS. Loans to small- and mid-sized enterprises (SMEs) increased 0.4 percent to 21.3 trillion won, while real estate project-finance loans grew 1.63 percent to 5.4 trillion won.

Meanwhile, the average delinquency ratio of household loans by insurers rose 0.02 percentage point on-month to 0.52 percent as of end-April, while the default rate for corporate loans jumped 0.09 percentage point to 1.44 percent.