Companies Survived the COVID-19 Crisis with Loans... April Corporate Loans Saw Record-Breaking Increase

Household Loans Increase by 4.9 Trillion Won... "Reduction in Credit Card Payments Due to Household Consumption Contraction"

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] It has been revealed that companies experiencing a sharp decline in sales due to the prolonged COVID-19 pandemic significantly increased their bank loans. On the other hand, the increase in household loans showed signs of slowing compared to the previous month (9.6 trillion won).

According to the "Financial Market Trends in April" released by the Bank of Korea on the 12th, bank corporate loans increased by a total of 27.9 trillion won last month, the largest amount since related statistics began in 2009. Loans increased by 18.7 trillion won in March, but in April, loan amounts rose as corporate performance continued to deteriorate due to COVID-19.

Large corporations increased loans by 11.2 trillion won, small and medium-sized enterprises (SMEs) by 16.6 trillion won, and loans to individual business owners also rose by 10.8 trillion won. The increase in loans for large corporations, SMEs, and individual business owners all reached record highs.

An official from the Market General Team of the Financial Market Department at the Bank of Korea analyzed, "The increase in loans to large corporations reflects increased demand for funds," and "For SMEs, it is due to the expansion of government policy fund disbursements."

Regarding the significant increase in loans to individual business owners, the Bank of Korea explained, "The demand for working capital by business owners increased due to a decline in sales," and "It expanded significantly due to policy support such as ultra-low interest loans targeted at small business owners."

Household loans at banks increased by 4.9 trillion won. However, the increase slowed compared to the previous month (9.06 trillion won). The slowdown in loans related to housing sales and jeonse (long-term lease) as well as a decrease in refinancing of non-bank loans reduced the overall increase. In fact, refinancing of non-bank loans under the Saemin-type Safe Conversion Loan dropped from 800 billion won in March to 100 billion won in April.

The Bank of Korea explained the rapid increase in household loans by stating, "Due to COVID-19, household consumption contracted, reducing demand for credit card payments," and "In March, personal stock investments surged, leading to credit loans, but this phenomenon also showed signs of weakening."

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