5 Major Banks, March Loans Surge by 20 Trillion Won

Large Corporations Borrow 8 Trillion Won, Corporate Loans Increase 3.6 Times
Household Loans Also 6 Trillion Won, Highest in 4 Years and 4 Months
Loan Increase Exceeding 10 Trillion Won Occurred Only 3 Times

[Asia Economy Reporter Kim Min-young] Last month, won-denominated loans from the five major commercial banks surged by nearly 20 trillion won. This is attributed to large corporations securing cash to increase liquidity amid growing global uncertainties caused by the spread of COVID-19, and small and medium-sized enterprises (SMEs) facing difficulties in raising funds increasing their borrowing. Additionally, households struggling financially due to the highest number of temporary layoffs in a decade last month also borrowed more than 6 trillion won from banks.

According to the financial sector on the 2nd, the balance of won-denominated loans from Shinhan, KB Kookmin, Hana, Woori, and NH Nonghyup Banks totaled 1,170.7335 trillion won last month. This represents an increase of 19.8688 trillion won compared to the previous month, marking the largest increase since September 2015. This is highly unusual. Until now, the won-denominated loans from the five major banks increased by more than 10 trillion won only three times: October 2015 (14.284 trillion won), November 2015 (13.0199 trillion won), and October last year (10.4353 trillion won). Since the beginning of this year, bank won-denominated loans have been steadily rising, increasing by about 5 trillion won each month?5.2775 trillion won in January and 5.532 trillion won in February.

Corporate loans jumped significantly. The increase in corporate loans in March was 13.4568 trillion won, 3.6 times the previous month’s 3.6702 trillion won.

In particular, loans to large corporations increased by 8.0949 trillion won. Typically, the increase in loans to large corporations is around 2 trillion won, but last month saw a noticeable surge. It is estimated that large corporations used pre-arranged bank credit lines to secure liquidity as the corporate bond market tightened due to COVID-19. Additionally, SMEs and small business owners facing financial difficulties likely increased their loans to cover factory and store operating expenses. Indeed, SME loans also rose by 5.3619 trillion won compared to the previous month, with loans to individual business owners increasing by 2.7755 trillion won.

A representative from a commercial bank explained, “Last year, the market was abundant in liquidity, but it has sharply frozen this year. Large corporations securing cash have accessed credit lines similar to overdraft accounts, and banks have lowered lending thresholds to support SMEs and self-employed individuals affected by COVID-19.”

Household loans also showed a significant increase. Household loans from the five major banks rose by 6.6801 trillion won last month, the largest increase in 4 years and 4 months since November 2015 (10.1822 trillion won), when household debt was rapidly increasing.

A substantial portion of household loans, mortgage loans, increased by 4.0688 trillion won. This is also the largest increase since December 2015 (5.6238 trillion won). Compared to increases of 1.2557 trillion won in January and 956.4 billion won in February this year, this is a significant rise. Personal credit loans also increased by 2.2408 trillion won last month, the largest increase since statistics became available in January 2016.

This content was produced with the assistance of AI translation services.