A solid capital buffer against possible debt defaults makes South Korean banks resilient to the country’s household debt, according to Moody’s.
“One reason for this resilience is that the loan portfolios of Korean banks, which account for about half of the household credit in the system, have structurally superior asset quality compared with non-bank lenders,” said Park Hyun-hee, an analyst at Moody’s.
“Their mortgage portfolios have lower loan-to-value ratios, and they tend to lend only to households with above-average income and credit quality.”
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