SEOUL, May 27 (Reuters) - South Korea’s annual household credit growth reached its highest in two years during the January-March period, central bank data showed on Tuesday, but the growth was mainly attributed to a decline in loans in the first quarter of 2013.
Household credit at the end of March, including loans and other credit owed by South Korean households, was up 6.4 percent year-on-year as credit rose 3.4 trillion won to 1,024.8 trillion won ($1.00 trillion), the Bank of Korea’s preliminary data showed.
It was up from a 6.0 percent gain three months prior and the quickest rise since a 7.1 percent incline seen in the first quarter of 2012. Household credit fell 0.9 trillion won in the first quarter of 2013, resulting in the bump seen in January-March this year.
A central bank official said loans taken out in the first quarter are usually modest, a result of year-end holiday bonuses and fewer housing transactions because of cold weather.
Household borrowing during the January-March period in 2013 was especially low due to the expiry of tax cuts at end-2012 that resulted in a surge of borrowing during the fourth quarter of 2012, the official said.
Loans owed to financial institutions gained 6.4 percent compared from a year ago during the first quarter of the year to 967.6 trillion won. Purchases on credit, including credit card transactions, gained 6.2 percent on a yearly basis to 57.2 trillion won, according to the quarterly data.
The South Korea government expects domestic consumption to contribute more to economic growth in Asia’s fourth-largest economy this year, but recovery in spending is still wobbly as consumer sentiment fell to an 8-month low in May.
The household credit growth estimates are subject to revision, and revised numbers are published by the Bank of Korea in the following quarter. ($1 = 1023.8500 Korean Won) (Reporting by Christine Kim; Editing by Eric Meijer)