South Korea household debt burden eases slightly: survey

[SEOUL] South Korean households' debt burden was lighter in March compared with a year earlier, and they spent more of their income to pay off debts that had reached onerous levels, according to a government and central bank survey released on Friday.

Household debt amounted to 156.4 per cent of their average annual disposable income, down from 160.4 per cent at the end of March last year.

Excluding non-financial liabilities, the debt-to-income ratio at South Korean households fell to an average of 106.8 per cent as of the end of March this year from 108.9 per cent a year before, the survey showed.

The share of annual disposable income spent on paying off debts rose to an average of 21.5 per cent in March from 19.1 per cent last year, showing the strain South Korean households have been under servicing their debts.

Heavy household debt, a legacy of the credit-driven property investment boom in the years before the 2008 global financial crisis, is seen as one of the biggest risks facing Asia's fourth-largest economy.

Statistics Korea, the Financial Supervisory Service and the Bank of Korea jointly surveyed 20,000 sample households across the country for debt and assets as of the end of March and for income and spending for the whole of 2013.

The most widely used ratio of debt to disposable income at South Korean households, compiled by the Bank of Korea, stood at 160.7 per cent at the end of 2013, down from 159.3 per cent at the end of 2012, a Bank of Korea official said.

REUTERS