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South Korea's households and non-profit agencies

South Korea's households and non-profit agencies held the largest amount of excess funds in 2012, since data has been available, as heightened economic uncertainty curtailed their spending, the central bank said Monday.

The value of excess funds held by households and non-profit organizations amounted to 86.5 trillion won (US$ 77.6 billion) in 2012, up from 54.9 trillion won the previous year, according to the Bank of Korea (BOK).

The 2012 data marked the largest amount since 2003 when the BOK began to compile related data.

Excess funds refer to the volume of money that remains after people manage available funds via deposits and stock investments.

"The data means that economic uncertainty led more people to refrain from spending even though overall income growth improved from a year earlier," Jeong Yu-seong, the head of the BOK's flow of funds team, said at a press conference.

Jeong said that households and others increased the holding of such extra funds as the sluggish property market led them to be wary of buying homes and investing in real estate.

But the ratio of their financial assets against debt came in at 2.15 as of end-2012, up from 2.08 the previous year as income growth raised their capacity to repay debt.

Korea's household debt problems are cited as the main bugbear for policymakers as high household indebtedness crimps consumer spending, hurting the economic growth. Korea's household credit reached a record 959.4 trillion won as of end-2012.

Meanwhile, companies' shortages of funds eased in 2012 from the previous year, meaning that more companies are refraining from making facility investments amid the slowing economy, the BOK said.

Local firms' capital shortages amounted to 59.9 trillion won last year, compared with 76.9 trillion won in 2011.

The money that local firms gained through bank loans and debt sales amounted to 127.9 trillion won last year, down from 151.3 trillion won in 2011, indicating that weak facility investment curtailed their demand for bank loans, the central bank said.

Korea's facility investment remains weak as companies are delaying big capital spending amid heightened economic uncertainty.

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