5 Major Banks' Credit Loans Increase by 1.14 Trillion Won in 10 Days... Unstoppable 'Yeongkkeul'

Top 5 Commercial Banks' Credit Loan Balance Reaches 125.4172 Trillion Won on the 10th
Increase Trend Continues Following Record High Growth in August

Reference image of bank loan counter (Photo by Yonhap News)

[Asia Economy Reporter Kim Hyo-jin] The surge in bank unsecured loans continues. It is analyzed that the trend is driven by 'debt investment' (bit-tu), where people borrow money to invest in stocks under the ultra-low interest rate environment, and the 30s to 40s age group 'young-kkeul' who gather all available loans and assets to buy their own homes.

According to the banking sector on the 13th, the balance of unsecured loans at the five major commercial banks?KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup?stood at 125.4172 trillion won as of the 10th of this month, increasing by 1.1425 trillion won in just ten days since the end of last month (124.2747 trillion won), or eight business days.

The balance of unsecured loans at the five major banks at the end of last month increased by 4.0705 trillion won (3.38%) compared to the end of the previous month. The growth rate rose by more than 1 percentage point compared to the previous month (2.28%). This is the largest monthly increase on record. If the trend over the past ten days continues, the total increase in unsecured loans this month is expected to be similar to or slightly less than last month.

This trend is closely related to the increased demand for stock and real estate investments. At the beginning of this month, Kakao Games' general investor public offering attracted 58 trillion won in subscription deposits, and according to bank statistics, unsecured loans increased significantly in the third and fourth weeks of August, close to the subscription dates.

With housing prices still rising and jeonse (long-term deposit lease) prices also increasing, the demand from young people trying to buy homes by supplementing insufficient housing funds mainly through unsecured loans continues to have an impact. Another major cause is the increase in small business owners relying on unsecured loans due to financial difficulties caused by the COVID-19 pandemic.

Continued Inflow of Loan Funds into Real Estate and Stocks
Living Expense Loans Also Affected Due to COVID-19
Authorities to Focus on Monitoring Circumvention of Mortgage Loan Regulations

The increase in unsecured loans is observed not only in the five major banks but across the entire banking sector. According to the Bank of Korea, household loan balances at banks reached 948.2 trillion won at the end of last month, increasing by 11.7 trillion won from the previous month, marking the largest monthly increase ever. Other loans, mostly consisting of unsecured loans, increased by 5.7 trillion won, also the largest monthly increase since statistics began.

The Financial Supervisory Service plans to hold a video conference on the 14th with deputy heads (group leaders in charge of credit) of the five major banks to discuss the rapid increase in unsecured loans. The FSS will focus on issues such as the use of unsecured loans as a means to circumvent tightened mortgage loan regulations and will also check whether competition among banks for loans has overheated.

Son Byung-doo, Vice Chairman of the Financial Services Commission, said at the Financial Risk Response Team meeting on the 8th, "We will also examine whether the recent increase in unsecured loans is due to competition among banks for loan performance." He added, "Although it is difficult to accurately identify the purposes of unsecured loans, it is estimated that a complex mix of factors such as increased demand for living and business funds, inflows of funds into asset markets like stocks and real estate, and aggressive business expansion efforts by internet banks have influenced this trend."

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