S Korea Banks' Household Loans Fall By Record Amount In January

SEOUL -(Dow Jones)- South Korean banks’ lending to households fell the most on record in January because of lower mortgage loans amid sluggish housing transactions, the Bank of Korea said Wednesday.
Banks’ overall household lending stood at KRW452.2 trillion in January, down KRW2.8 trillion from December 2011 and the biggest month-on-month decline on record. Such loans rose KRW1.8 trillion in December from the previous month.
The BOK attributed January’s drop in lending to lower mortgage loans, caused by seasonally weak housing transactions, as well as hefty loans in the previous month, as homebuyers hurried to settle their purchases before the year-end expiry of property acquisition tax benefits.
Mortgage lending to households fell KRW800 billion on month to KRW305.3 trillion in January, the largest monthly fall since a KRW1.2 trillion decline in May 2007. Such loans rose KRW2.5 trillion in December.
“January’s sharp fall in household loans is a one-off, which occurred amid the government’s efforts to reduce such loans,” an official at the BOK’s financial market department said.
Growth in household mortgage loans has slowed in recent months as commercial banks refrained from lending after the government in June tightened rules to curb household debt and prevent potential defaults from destabilizing the economy.
Bank lending to domestic businesses rose sharply last month, as companies resumed borrowing after repaying debt in December to improve their year-end debt ratios. The rise was also due to big firms’ efforts to secure funds amid worsening global funding conditions, the BOK said.
Bank loans to companies rose KRW6.8 trillion to KRW563 trillion in January, compared with a month-on-month decline of KRW9.1 trillion in December.
The lending data for households and businesses don’t include loans by non-bank financial companies.
In a separate statement, the BOK said the country’s broadest measure of money supply, known as L, rose 9.4% in December from a year earlier to KRW2,974.4 trillion, accelerating from a 8.9% gain in November.
The L money supply includes cash, deposits at financial institutions and money-market instruments.
South Korea’s M2 money supply rose 4.4% from a year earlier to KRW1,756.6 trillion, the same pace as in November.
M1, the narrowest gauge of money supply, rose 1.6% from a year earlier to KRW432.6 trillion versus a 2.0% rise in the previous month.
M1 comprises cash in circulation, demand deposits and savings at financial institutions. M2 consists of M1 plus time deposits with maturities of less than two years.
-By In-Soo Nam, Dow Jones Newswires; 822-3700-1902; In-Soo.Nam@dowjones.com

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  02-07-122214ET
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PNC Financial income tumbles on higher costs

PITTSBURGH (AP) — PNC Financial Services Group Inc. said Wednesday that its fourth-quarter net income dropped 43 percent on higher expenses and a comparison to a year-ago stock sale gain, while revenue fell.
Shares dropped $2.52, or 4.1 percent, in morning trading to $58.72.
The regional bank‘s net income attributable to common shareholders was $451 million, or 85 cents per share, for the October-December quarter, compared with $798 million, or $1.50 per share, in the same three months the year before.
Revenue fell 9 percent to $3.55 billion.
Analysts polled by FactSet were expecting a profit of $1.37 per share on revenue of $3.52 billion.
The largest part of the bank’s revenue, net interest income, or money earned from loans and deposits, was essentially flat with the fourth-quarter of 2010 at $2.2 billion. Lending grew $4.5 billion, or 3 percent, during the quarter.
Noninterest income, or income from fees and charges, fell 21 percent from a year earlier because the fourth quarter of 2010 included a $160 million gain on the sale of stock. New government regulations on debit card fees also reduced revenue.
The company, echoing many other banks, said that the credit quality of its loans was improving. PNC put less aside less than half what it did a year earlier for credit losses — $190 million in the fourth quarter compared with $442 million at the end of 2010.
Noninterest expenses, which included $156 million in after-tax expenses related to residential mortgage foreclosures, rose 16 percent. Noninterest expenses can include everything from salaries to loan loss provisions.
For all of 2011, the company’s net income attributable to common shareholders was almost unchanged at $3 billion, or $5.64 per share, compared with $3.01 billion, or $5.74 per share, in 2010. Revenue fell 5.5 percent to $14.33 billion from $15.18 billion.
PNC is based in Pittsburgh.
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