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South Korea Commercial Banking Report Q3 2007Product Type: Market Research ReportPublished by: Business Monitor International Published: November 2007 Product Code: R302-1615 Description Key IssuesThis quarter we have updated a lot of the numeric information in the banking reports. We now have final banking statistics, sourced from the central bank/regulator or trade association, in relation to the end of 2006 for all countries other than Iran. All of the commercial banking reports need to be considered in the context of a global environment that was benign for banks in the vast majority of the 59 countries for which have collected data. In 2006 the median local currency growth in total assets was 17.2% (in Croatia). The median local currency growth in total loans was 18.2% (in Bangladesh). The median local currency growth in total deposits was 16.9% (in Algeria). In almost all countries local currencies were stable or rising relative to the US dollar. Except in Venezuela and Iran, figures were not distorted by double-digit inflation. Loan/deposit, loan/asset and Loan/GDP ratios all provide a rough measure of the development of the banking systems. Across the 59 countries for which we have collected data, the median loan/deposit ratio is 85.1% (in Thailand). The median loan/asset ratio is 54.8% (in Romania). The median loan/GDP ratio is 53.4% (in Kuwait). Across the eurozone, by comparison, the equivalent numbers are 126.4%, 50.6% and 119.3%. All three ratios are rising in most of the countries for which we have collected data. The chaebols, or large conglomerates, continue to dominate the South Korean economy. Despite driving growth, they lack financial transparency and are in need of reform. Structural reforms should allow the South Korean economy to avoid the kinds of problems raised in the financial crisis of 1997. Corruption and labour militancy continue to be of some concern and the appreciating won will have a negative impact on the export sector. A softening in external demand is likely to decrease export growth, in turn moderating the growth of the South Korean economy. The commercial banking sector is currently experiencing an increased presence of foreign banks and overall optimism among bank lenders. The economy does, however, have a history of overlending, and the high and rising loan/deposit, loan/asset and loan/GDP ratios suggest that business and consumers are carrying an uncomfortably high level of debt. Growth in the financial sector will aid the government’s sale of bonds. Table of Contents
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