SEOUL, Feb. 8 (Yonhap) -- South Korean banks' household loans declined in January from the previous month on sluggish housing markets, the central bank said Wednesday.

   Local banks' household loans, including home-backed loans and credit loans, reached 452.2 trillion won (US$405 billion) as of the end of January, down 2.8 trillion won from a month ago, according to preliminary data of the Bank of Korea (BOK).

   Lenders' household loans declined for the first time last month after posting consistent growth since February of 2011, according to the BOK data.

   The South Korean government and financial watchdog have been trying to put a lid on mounting household debts as heavy indebtedness is feared to squeeze private consumption, one of two growth engines of the domestic economy.

   Although household loans usually dip in January from the previous month, the decline last month was "unusual" and was bigger than in previous years, the BOK said.

   The latest drop in household loans was due to a slump in housing sales, which reduced demand for home-backed loans, the central bank said. A one-time factor, such as a tax break phaseout at the end of 2011, also diminished demand for new credits in January.

   Home-backed loans fell by 800 billion won last month from December, compared with a 2.5 trillion won increase a month earlier.

   Meanwhile, South Korean banks' corporate lending rose sharply in January from the previous month due to a seasonal factor, with a particular growth in lending to big corporations, the BOK said.
Corporate loans by local banks gained by 6.8 trillion won on-month to 563 trillion won ($504 billion), turning around from a 9.1 trillion won fall in December, according to the central bank's preliminary estimate.

   Bank lending to large firms expanded sharply by 5 trillion won to 120.1 trillion won, as some large-size industrial groups tried to increase liquidity.
Bank loans to smaller firms grew 1.9 trillion won to 442.9 trillion won, it said.

   The data was released one day before the central bank's monthly rate-review meeting. Analysts widely expect the BOK to keep the key interest rate unchanged at 3.25 percent for the eighth straight month on slowing domestic growth and still-high inflationary pressure.

   ylee@yna.co.kr
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