'Big Hit Effect' Turning Point... Will Credit Loans Tighten After Chuseok?

Rapid Increase in Credit Loans at 5 Major Banks in September
Full-Scale Implementation of Management Measures After Chuseok Holiday

Reference image of bank loan counter (Source=Yonhap News)

[Asia Economy Reporter Kim Hyo-jin] As financial authorities and banks tighten regulations on soaring unsecured loans, attention is focused on when the loan growth trend will begin to slow down significantly. Due to factors such as the subscription for initial public offerings (IPO) of Big Hit Entertainment, the agency representing BTS, the increase is expected to continue for a while, but the atmosphere may cool somewhat after the Chuseok holiday when banks' loan restraint measures are fully implemented.

According to the banking sector on the 28th, as of the 24th of this month, the outstanding balance of unsecured loans at the five major commercial banks?KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup?stood at 126.8863 trillion won, up 2.6116 trillion won compared to the end of last month (124.3335 trillion won). If this trend continues, the total increase in unsecured loans at the five major banks for this month is expected to exceed 3 trillion won. Although this is less than last month's record monthly increase of about 4 trillion won, it remains the second highest on record, indicating a still high level.

This is interpreted as a continued result of trends such as 'debt investment' (bit-tu), where people borrow money to invest in stocks, and 'all-in' (young-kkeul), where people gather all their resources to buy a home. Especially this month, the general subscription for Big Hit Entertainment's IPO (scheduled for the 5th to 6th of next month), considered the biggest IPO of the year, is heating up the market.

A representative example is K Bank's marketing campaign, which lends up to 45 million won to 10,000 people as subscription deposits for Big Hit Entertainment and returns the interest as cashback. A banking industry official said, "Even banks that do not officially conduct marketing events are likely seeing active unsecured loans related to Big Hit Entertainment."

BTS / Source=Yonhap News

Interest Rates Raised One After Another and Loan Limits Tightened

As the 'Big Hit effect' subsides and the Chuseok holiday passes, loan tightening by banks is expected to accelerate.

Woori Bank will strengthen the preferential interest rate conditions for its 'Woori Main Transaction Employee Loan' starting next month on the 6th. This includes abolishing the 0.1% preferential interest rate for utility and management fee transactions and stopping the overlapping application of preferential rates for credit cards, installment savings products, and open banking subscriptions. For the 'Woori WON Employee Loan,' the preferential interest rates based on salary transfers to Woori Bank accounts and Woori Card payment performance will be reduced by 0.1 percentage points each.

KB Kookmin Bank plans to raise the interest rates on all unsecured loan products by 0.1 to 0.15 percentage points starting from the 29th by reducing preferential interest rates. Additionally, KB Kookmin Bank will lower the unsecured loan limit for professionals from the current maximum of 400 million won to 200 million won, and reduce the limit for the 'KB Workplace Reliable Unsecured Loan' from a maximum of 300 million won to 200 million won. Kakao Bank raised the minimum interest rate on employee unsecured loans by 0.15 percentage points from the previous annual rate of 2.01% to 2.16% on the 25th.

Other banks such as Shinhan Bank and Hana Bank also plan to finalize and implement specific measures such as interest rate hikes and limit reductions soon.

It is known that banks recently submitted plans to financial supervisory authorities outlining these measures along with their management plans to control the total volume of unsecured loans to a certain level by the end of this year. The financial authorities plan to closely monitor loan trends based on banks' self-management plans and consider implementing separate regulations if the rapid increase continues.

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