Financial Markets

1. Interest Rates

□ Treasury bond rates (3yr) fell drastically, affected by a weaker

expectation for a rise in the BOK Base rate, but then fluctuated
between 4.20~4.30%.

o Concerns over a recent tight-money policy in China, financial

regulations in the US and fiscal crises in some European
countries have served as a factor causing a drop in the rates.

□ Corporate bond rates (3yr) also fell drastically, centering around

bonds with high credit rating.

□ CD rates (91 days) rose slightly at the beginning of the year and
then remained at 2.88%.

Major Interest Rates

(%, %p)
End-Dec
　 End-Dec 08 End-Nov 09 End-Jan 10 Feb 9 (B) B-A
(A)
￭ BOK Base rate 3.00 2.00 2.00 2.00 2.00 0.00

￭ Treasury bonds (3yr) 3.41 4.10 4.41 4.27 4.27 -0.14

￭ CD (91 day) 3.93 2.79 2.86 2.88 2.88 +0.02

￭ CP (A1, 91 day) 6.49 2.96 3.09 3.12 3.12 +0.03

￭ Ba nk d ebent u r es
5.63 4.87 5.18 4.91 4.872) -0.31
(3yr, AAA)1)
￭ Corporate bonds
7.72 5.21 5.53 5.33 5.292) -0.24
(3yr, AA-)1)
￭ Corporate bonds
12.06 11.27 11.56 11.42 11.402) -0.16
(3yr, BBB-)1)
Notes : 1) Average interest rates on bonds rated by Korea's three private credit rating
agencies 2) As of Feb 8

- 1 -
2. Stock Prices

□ The KOSPI went up to 1,722p (on Jan 21) on the back of robust
corporate performance on the domestic front, but then fell
sharply owing to China's tightening of liquidity.

o In February, in particular, stock prices plunged owing to the

emergence of fiscal crises in some European countries
including Greece.
(points)
End '08 Sep 22 09 End-Nov End-Dec Jan 21 ' 10 End-Jan '10 Feb 9
￭ KOSPI 1,124 1,719 1,556 1,683 1,722 1,602 1,570

□ Foreign investors continued to net buy Korean stocks, but then

shifted to big net sellers from late January onwards.
Sep '09 Oct Nov Dec Jan 10(Jan 22~29) Feb 1~9
￭ Foreign investors'
net purchase +5.1 +1.6 +2.0 +2.3 +0.7 -1.1 -0.4
(in trillion won)

3. Flow of Funds

□ Deposits taken by banks shifted to a huge increase in January.

(-8.3 trillion won in Dec '09 → +15.7 trillion won in Jan '10)

o This was mainly because an increase in time deposits hit a

record high (+23.1 trillion won), led by banks' efforts to cut their
loan-to-deposit ratios and to offer special high interest rate
deposit products for the purpose of renewing maturing
deposits.

o Meanwhile, CDs and bank financial debentures continued to

decline owing to banks' efforts to reduce wholesale funding.

- 2 -
□ Deposits taken by asset management companies also fell, as in
the preceding month.
(-11.1 trillion won in Dec '09 → -5.1 trillion won in Jan '10)

o MMF deposits exhibited a decline owing to their weakened

interest rate competitiveness. Stock-type funds fell due to
continued fund redemption, and bond-type funds also
declined owing to the outflow of corporate funds from those
accounts following a rise in the interest rates on banks' time
deposits.

Deposits at Major Financial Institutions

(end-period increase/decrease, trillion won)
2008 2009 2010 Outstanding
amount
(End-Jan
Year Jan Year Jan Nov3) Dec Jan 2010)

￭D M Bs 1) 104.3 11.6 54.8(72.6) -5.2 1.5(2.8) -8.3 15.7 1,023.2

(Instant access
accounts2))
11.8 -14.6 41.1 0.5 0.6 9.2 0.1 287.2
(Time deposits) 63.0 20.4 39.1 2.6 4.5 -2.2 23.1 400.1
(C Ds) 8.2 7.1 -1.9 -3.7 0.4 -12.1 -5.4 97.6
(Bank
debentures)
31.2 3.5 -19.3(-1.5) -3.3 -2.2(-0.9) -0.7 -1.8 174.1

￭AMCs 63.0 23.5 -27.7 17.7 4.4 -11.1 -5.1 326.7

MMFs 42.2 8.7 -17.2 18.5 5.1 -6.2 -2.7 69.0
(Individuals) -3.1 -1.7 -1.6 6.8 -1.8 -0.7 -0.9 25.5
stock-type 23.9 11.5 -14.0 -1.0 -0.7 -3.0 -1.8 124.4
bond-type -10.5 1.2 15.8 1.8 0.5 -0.1 -1.1 45.0
mixed-type -5.4 1.5 -7.8 -1.2 -0.5 -0.8 0.2 31.6
New funds 12.9 0.7 -4.4 -0.4 -0.0 -1.0 0.4 56.7
Notes : 1) Excluding deposits of banks, central government and non-residents
2) Including demand deposits
3) Figures in ( ) represent those including industrial and bank financial
debentures transferred.

- 3 -
4. Corporate Funding and Household Credit

□ Bank lending to the corporate sector shifted to an increase in

January (-11.7 trillion won in Dec '09 → +4.2 trillion won in Jan '10).

o Lending to small and medium-sized enterprises (SMEs)

increased due to value-added tax payments and the
re-lending of loans temporarily redeemed at the previous
year-end, but the volume of increase was smaller than those
of ordinary years affected by a reduced guarantee (-7.9 trillion
won in Dec '09 → +1.2 trillion won in Jan '10; monthly average of
+3.8 trillion won during January of '04~'09).

□ CPs (including those of public enterprises, based on January 20 figure)

shifted to a net issuance (-5.0 trillion won in Dec '09 → +1.4 trillion
won During Jan 1~20 '10), owing to the reissue of paper
temporarily retired at the previous year-end.

□ The volume of net issuance of corporate bonds (public offerings)

decreased slightly month-on-month (+1.3 trillion won in Dec '09 → +1.1
trillion won in Jan '10), owing to an increase in the volume of
maturing corporate bonds.

□ Fund-raising through the stock market decreased from the

preceding month (2.0 trillion won in Dec '09 → 0.8 trillion won in Jan
'10) when capital increases with consideration were actively
made.

- 4 -
 Corporate Funding

(end-period increase/decrease, trillion won)

2008 2009 2010 Outstanding
amount
Year Jan Year Jan Nov Dec Jan (end-Jan
2010)
Bank loans1) 78.3 12.2 14.5 7.0 2.2 -11.7 4.2 510.4
(Large Cos.) 30.3 4.3 -5.2 4.1 -0.2 -3.8 3.0 78.5
(SMEs) 48.0 7.9 19.7 2.8 2.5 -7.9 1.2 431.9
Acquisition of private
placement bonds by -6.7 -0.4 -2.9 0.3 -0.5 -1.3 -0.6 25.0
2)
banks
CP (net)
3)
13.4 4.2 -9.9 6.1 -0.2 -5.0 1.45) 23.25)
Corporate
bonds (net)
8.4 1.2 32.6 4.5 0.5 1.3 1.1 ‥
4)
Stocks 4.1 0.3 9.1 0.4 1.1 2.0 0.8 ‥
Notes : 1) Includes trust accounts and the Korea Development Bank.
2) Won-denominated private placement bonds acquired by domestic banks (including the
Korea Development Bank).
3) CP transaction data of Korea Federation of Banks
4) Combined total of the KOSPI and Kosdaq markets 5) As of Jan 20

□ Bank lending to the household sector shifted to a decrease in

January (+0.5 trillion won in Dec '09 → -1.0 trillion won in Jan '10).

o The pace of growth in mortgage loans decelerated from the

previous month (+2.0 trillion won in Dec '09 → +0.6 trillion won in Jan '10
; +2.6 trillion won → +1.3 trillion won with the loans assigned to KHFC
included), influenced by the low season for housing transactions
and by a decrease in the number of newly available housings.

o Other loans, including those taken by holders of overdraft

accounts, continued to decline significantly as in the previous
month (-1.5 trillion won in Dec '09 → -1.6 trillion won in Jan '10),
affected by a bonus paid at the beginning of the year.

- 5 -
 Household Loans
(end-period increase/decrease, trillion won)
2008 2009 2010 Outstanding
amount
(end-Jan
Year Jan Year Jan Nov Dec Jan 2010)

Household loans1) 25.0 -0.7 20.1 -1.6 2.6 0.5 -1.0 407.6
￭ (security against
18.1 0.8 25.4 1.8 1.6 2.0 0.6 265.7
housing)2)
[including mortgage loans
3) 24.7 0.8 35.0 2.2 2.2 2.6 1.3 ‥
assigned to KHFC]
￭ (overdraft accounts) 6.8 -1.5 -4.5 -3.2 1.0 -1.5 -1.6 140.7
Notes : 1) Trust account lending is represented in the overall household loans
category, but not in the loan sub-category figures.
2) Including housing loans
3) Including Bogeumjari loans and loans assigned to KHFC

5. Monetary Aggregates

□ Year-on-year M2 growth (average basis) in January is estimated to

have remained at the upper-8%, as in the previous month.
* With securities companies' CMAs included, the figure would be
estimated at the lower-9%.

o This was attributable to the supply of funds from the

overseas and government sectors through foreign investment
in the domestic bond market and the government's
borrowing from the Bank of Korea, which offset a decrease
in the supply of credit to the private sector centering around
corporate lending.

- 6 -
<Ref 1> Deposits at Financial Institutions
(increase/decrease over period, 100 million)
Outstanding
Aug 09 Sep Oct Nov Dec Jan 10 amount
(end-Jan 10)
-67,548 14,953
Bank accounts1)2) 134,561 165,492 -83,347 157,340 10,232,437
(97,795) (27,535)
Demand deposits less
uncleared checks & 18,553 41,638 -50,648 21,142 27,609 6,609 742,052
bills
Time & savings
deposits 129,994 113,542 125,625 31,201 34,679 215,315 6,571,941

(Time deposits) 40,952 92,249 131,544 44,692 -21,544 230,953 4,001,295

(Instant access
accounts) 76,302 21,483 -8,386 -14,997 64,537 -5,755 2,129,818

CDs + RPs + cover bills -2,246 -16,683 20,725 -15,820 -138,172 -46,373 1,177,078

Bank debentures
2)
-11,741 26,995 -163,250 -21,570 -7,463 -18,210 1,741,366
Asset Management
Companies3) -77,556 -183,017 -73,444 43,871 -111,177 -50,953 3,267,019
Stock investment
trusts -27,698 -30,021 -11,852 -7,127 -29,862 -18,343 1,243,974

Mixed-type investment
trusts -7,104 -2,136 455 -4,900 -8,351 1,885 316,268

Bond investment trusts 18,468 12,492 7,653 5,364 -811 -11,291 449,785

MMFs -64,669 -160,356 -61,776 50,863 -62,448 -27,007 689,898

New funds
4)
3,447 -2,996 -7,924 -329 -9,705 3,803 567,094

Money in trust funds -835 4,072 16,938 3,709 -1,876 10,236 690,887

(Specific money
in trust) -907 3,065 15,958 -226 -28,725 17,371 463,711

Merchant banking
corporations 6,732 -8,834 9,975 -5,269 10,763 3,599 220,425

Bills issued 5,981 -10,439 9,061 -5,364 6,793 -17,784 160,614

CMAs 751 1,605 914 95 3,970 21,383 59,811

Bills sold -32,919 -16,103 3,041 -4,324 -21,377 30,863 253,501

Postal savings -3,215 13,457 -11,100 -16,442 10,358 37,488 479,003

Deposits at securities
companies -4,538 -685 -7,202 -8,610 -4,962 12,715 130,580
Notes : 1) Excluding deposits from banks, the central bank and non-residents
2) Figures in ( 　　　） refer to those excluding industrial financial debentures and bank debentures transferred
3) Based on investment trusts and investment companies
4) Including money invested in indirect investment funds including derivative funds

- 7 -
<Ref 2>

Corporate1) Funding and Household Loans

(increase/decrease over period, 100 million)
Outstanding
Aug 09 Sep Oct Nov Dec Jan 10 amount
(end-Jan
2010)

Corporate
30,303 29,436 20,578 22,498 -116,616 42,401 5,103,923
loans2)

Large
-150 1,568 -1,522 -2,461 -38,011 30,056 785,070
corporations

SMEs 30,453 27,868 22,100 24,959 -78,605 12,345 4,318,853

Net issuance of
corporate 8,185 18,781 8,586 5,473 12,946 11,336 ‥
bonds3)

Net issuance of
-15,135 -12,060 519 -2,408 -50,299 13,5266) 232,0936)
CPs4)

Household
29,653 -9,574 13,986 25,966 4,573 -10,289 4,075,851
loans2)

(Loans secured
by mortgages)5) 27,895 -4,184 14,262 15,734 19,560 6,053 2,656,896

Notes: 1) Excludes financial companies 2) Includes trust accounts

3) Based on bonds (including P-CBOs but excluding ABS) issued through public subscription
4) Based on securities companies and merchant banking accounts of securities companies and banks
5) Including housing loans, but excluding trust accounts 6) As of Jan 20

- 8 -