Decline mainly due to removal of 102,000 deceased from defaulters list

[옌팅~!]

 

6/28/ Tue.

Decline mainly due to removal of 102,000 deceased from defaulters list

                                                                   by 옌팅~!

The number of Korean debt delinquents fell in May, but analysts attributed the drop mainly to a statistical adjustment rather than any turnaround in the nation's credit overextension problems.

As of May 31, the number of people with debt payments overdue by at least three months totaled 3.7 million, down 87,869, or 2.3 percent, from a month earlier, said the Korea Federation of Banks.

Analysts said the decline was mainly due to the federation's removal of 102,000 deceased people from the defaulters' list. Beginning in March, the federation also deleted consumers behind on their tax payments or court-ruled obligations. If all these people were included, the number of delinquents would have ballooned to a record high of nearly 4 million, more than 8 percent of the country's 48 million population.

Still, the bank association maintained that consumer debt overload problems were easing somewhat.

"Even before deleting the deceased, the number of delinquent individuals grew just 14,459 (0.38 percent) from the previous month. The increase was the lowest level since July 2002, suggesting the growth of credit delinquents has been slowing recently," a federation official said. In particular, the number of credit card defaulters, who make up roughly two-thirds of the total, declined 1.24 percent to 2.3 million. Card issuers are keeping a closer watch on credit lines given to customers.

Card companies have grappled hard with amassing overdue bills since last year, when Korea's scorching credit boom went sour, depressing consumer spending and decelerating the economic growth to a five-year low of 3.1 percent.

Unnerved by the situation, the government and financial companies jointly set up a debt management agency, which is offering new loans to some of debtors at low interest rates for a period up to eight years.

The government is also encouraging individual lenders to reschedule debt for those who are ineligible for loan extension by the agency, named Badbank Harmony Co. The state-engineered efforts are helping clean up the creditors' financial books.

LG Card Co., once the nation's biggest and fastest-expanding card operator that was driven to bankruptcy earlier this year, said Friday that its non-performing assets and the outstanding amount of refinanced debt all decreased for a third month in May.

The company's delinquency ratio edged up just 1.62 percentage point in May to 16.4 percent.

LG's rivals are all reporting stabilizing default ratios.

Overdue bills at Samsung Card Co. accounted for 9.05 percent of its total credit at the end of May, down 1.85 percentage point from a month before. The comparable BC Card Co ratio fell from 8.47 percent to 6.57 percent.

Other card providers such as Shinhan, Lotte and Hyundai all saw their delinquency ratios move slightly upward. "As card companies have tightened criteria for new issuance, while writing hefty bad assets, the overall default ratio is settling down," an industry watcher said.

@ Today's questions.....@@@

1. Have you ever hard time or rue due to impulsive purchase? If you went through, could you open your heart?? ( It's O.K in cases of your friends , family & acquaintances etc. )

2. Analysts argue that decline of defaulters' figure comes from removal of the deceased while the bank association have different opinion. In your book, which opinion is right?

3。Since Badbank Harmony Co., a debt management agency,  has been implemented, there are controversial opinions.  Some people are agree this system while others disagree.  How about your opinion?