Surging household debt and a prolonged low-growth trend are two major systemic risks facing South Korea's financial system, a poll showed Monday.

The household debt issue topped the list of key systemic risks cited by market watchers at 66 percent, followed by a sluggish growth trend and inflation at 64 percent, according to the semi-annual survey conducted by the Bank of Korea.

The central bank polled 82 officials at local banks and non-banking institutions in addition to foreign assets managers between April 27 and May 8. The survey has been conducted every six months since July 2012.

The latest results showed that while China's slowing growth and the U.S. Federal Reserve's expected interest rate hikes are still lingering risks, but respodents saw such risks reduce sharply.

The portion of responses that picked China's slowing growth as a systemic risk slipped to 60 percent from 64 percent, while that citing the rate hike as a systemic risk sharply fell to 60 percent from 70 percent.

The results come as bulky household debt remains a chronic bugbear for South Korea, where such debt is feared to sap consumption and possibly trigger a credit risk once interest rates begin trending higher.

Household debt reached 1,040.4 trillion won (US$934.6 billion) as of the end of March, rising 12.8 trillion won from the end of last year.

The latest results also reflect heightened concerns over low growth and inflation as exports, the country's key growth engine, have stuttered on weak demand and unfavorable foreign exchange conditions.

Both local and global institutions have lowered their growth forecast for Asia's fourth-largest economy, with the BOK cutting its forecast to 3.1 percent from 3.4 percent in April. The state-run Korea Development Institute also slashed its growth outlook to 3 percent from 3.5 percent late last month. (Yonhap)