Kookmin Bank, `by Household Loans`

Kookmin Bank, despite concern of government and Bank of Korea, decided to increase household loans steadily, “there is no concern about credit crisis due to household loans”.

Such `declaration of exclusive route` of Kookmin Bank is analyzed as breaking co-operation system between Government-Banks.

Vice- Chairman as well as Chairman of research institute of Kookmin Bank, Choi Bum-soo, stated at a press conference on 20th, “ we will steadily increase household loans as it is an opportunity for raising profits”.

Kookmin bank which makes profit of 2 trillion won per year stated so announcing situation of loan that surveyed 1,475 houses.

Vice-chairman Choi said, “80 percent people who receives household loans is` high income-low loan `or salary man in the age group of 30, 40 years, therefore, they have capacity to repay loan money and houses which do not use loan are also 50 percent so, market for household loans has high profits”.

Researcher Kim Jung-in, who wrote report also said, “individual who has high deposits can also became client for bank loan as there are many opportunities for new business” and prospected growth possibility of household loans market in which the bank is leading.

Researcher Kim said, “as there is no household loans market that lends at 20 percent annual interest rate, the U.S. Citibank, French Cetelem (collaboration with Shin Han bank) are going to open market targeting consumers who are paying 60 percent interest per year”, and “Kookmin bank is also discussing the method to join the market”.

Government presented `measures for controlling household loans` successively such as △ in case amount of household loans is high, supporting low interest of Bank of Korea should be reduced △ in case of loan by house security, it should reduce scale of loan △ earmark money in minus bank book should be increased, etc.

C.E.O. side of Kookmin bank is known to have instructed on Government measures, “ despite control of government, if it is judged that profit by expanding loan is bigger, then increase loan”.

Kookmin Bank that has 190 trillion won of assets has 60 trillion and 150 billion won balance of household loans, in the standard of year 2001 end, and its occupation rate of market reaches 48 percent, among main banks.

In addition, Kookmin Bank stated that 37.2 percent among houses of this survey received household loans, as for scale of loan, loan by house security is average 32,700,000 won, credit loan is 22,870,000 won and card loan is 4,530,000 won.

The report prospected situation of loan that 80 percent of household loans is sound, however low income class 20 percent, especially individuals who received loan from the second finance world like mutual deposit bank, would be affected by rising interest rate or fall in assets prices.

Seung-Ryun Kim srkim@donga.com