HONG KONG (Yonhap News) ― South Korean banks are resilient to the country’s heavy household debt, as they have a solid capital buffer against possible debt defaults, Moody’s Investors Service said Thursday.

Heavy household debt has often been cited as one of the major concerns for the South Korean economy, which could pose a serious threat to the already slowing economy.

“One reason for this resilience is that the loan portfolios of Korean banks, which account for about half of the household credit in the system, have structurally superior asset quality compared with non-bank lenders,” said Park Hyun-hee, an analyst at Moody’s.

“Their mortgage portfolios have lower loan-to-value ratios, and they tend to lend only to households with above-average income and credit quality.”