Jeong Eun-bo, head of the Financial Supervisory Service, said, “We will manage the increase in household loans to the pre-COVID-19 level.”

Jeong Eun-bo, head of the Financial Supervisory Service, speaks at a meeting with the heads of research institutes held at the Bank Hall in Seoul on the 5th. yunhap news

Financial Supervisory Service Commissioner Jeong Eun-bo said, “We will establish a lending practice based on repayment capacity, such as expanding the DSR for each borrower.”

President Jung said at a meeting with the heads of research institutes held at the Bank Hall in Jung-gu, Seoul on the morning of the 5th, saying, “We will manage the increase in household loans to the pre-COVID-19 level of 4-5% so that household debt does not expand as an economic constraint.” He added, “We plan to carefully manage loans that are in real demand for the working class and vulnerable groups, such as providing sufficient limits and incentives.”

At the meeting on the same day, President Jung said, “This year, while the Korean financial sector continues its efforts to overcome COVID-19, there is a task to preemptively manage potential risks that were hidden in the process of overcoming the crisis.” Reinforcing household debt management, strengthening management of potential risk in real estate, and strengthening of short-term financial market risk management during interest rate rises were cited.

He said, “The business environment for small businesses has deteriorated due to social distancing, etc.” “We are supporting the already in operation pre-workout (pre-debt restructuring) and debt restructuring systems to be more active, and we are working with banks and related institutions to support sales recovery. We will expand support for management consulting for small businesses,” he said. According to the Financial Supervisory Service, there were 1.82 million active business operators (monthly card sales of 50,000 won or more) in the third quarter of last year, down 6.8% from 1.96 million in the first quarter of the same year, showing a decline for six consecutive months.

Regarding real estate, he said, “As the low interest rate trend has continued for the past several years, a lot of money has flowed into the real estate market, and the form of real estate finance has also become complicated through the process of structuring and securitization. As this may affect the financial institutions, we will set aside sufficient provisions for real estate-related assets owned by financial companies and evaluate investment losses in a timely manner to enhance loss absorption capacity.”

The heads of research institutes who attended the meeting predicted that the global economy will continue to recover this year, but the growth rate will be slower than last year. As the major risk factors facing, accelerated inflation, a hard landing of the Chinese economy, and prolonged COVID-19 were cited.

“The domestic financial industry will maintain a boom this year, but growth and profitability will be somewhat stagnant compared to the previous year,” said Park Jong-gyu, head of the Korea Financial Research Institute. Shin Jin-young, head of the Capital Market Research Institute, said, “The domestic stock market is expected to show an upward trend thanks to the recovery of the real economy after the correction in the second half of last year. “The supply chain bottleneck can lead to increased volatility in the stock market,” he said.

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