'Reignited Debt Investment'... 18,000 Credit Line Accounts Opened in 2 Weeks

5 Banks Opened 18,660 New Accounts by the 13th
Credit Loans Surge Again Amid Demand from Yeongkkeul and Others

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

[Asia Economy Reporter Kim Hyo-jin] Since the beginning of this year, the number of newly opened overdraft accounts at major commercial banks has exceeded 18,600 within just two weeks. This is interpreted as a result of a combination of factors, including the surge in the stock market, the rush of individuals trying to invest with borrowed money ('debt investment'), and uncertainties in the loan market.

According to the banking sector on the 15th, from the 1st to the 13th of this month, a total of 18,660 overdraft accounts were newly opened at five major commercial banks: KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup. Considering it is the beginning of the year, this is considered unusual. Typically, in early January, year-end bonuses are deposited into accounts, leading to an increase in savings and deposit balances rather than loans. Especially given that only eight business days have passed, this number is quite high.

A bank official said, "Compared to the same period last year, new account openings have increased by about 30%," adding, "This is an unusual level for the start of the year."

Another bank official diagnosed, "Overdraft accounts were usually opened by office workers to prepare emergency living funds or to purchase vehicles, but recently, it seems many are purely for stock investment purposes." He continued, "At least compared to last year, the increased amount suggests that more funds are flowing into the stock market."

The demand for loans to cope with skyrocketing housing prices and jeonse (long-term deposit lease) prices intertwined with stock investment is causing the total personal credit loan balance in the banking sector to surge. As of the 13th, the credit loan balance at the five banks stood at 135.3695 trillion won, up 1.7213 trillion won from the end of December last year (133.6482 trillion won). Simply calculated, this means an increase of about 130 billion won per day.

The financial authorities have been tightening the reins on loans continuously from September last year until the end of the year, aiming to limit the monthly increase in credit loans in the banking sector to a maximum of 2 trillion won.

Due to this policy, the rapid increase in credit loans, which had sharply declined at the end of the year due to high-intensity regulations such as suspension of major loan products, reversed to a rapid surge as soon as the new year began and restrictions were loosened.

A financial authority official said, "We are viewing the recent trend seriously," and added, "It is necessary to manage excessive fund inflows into asset markets such as stocks and real estate, focusing on targeted regulations for high-income and high-credit groups."

Demand May Continue to Surge Amid Concerns Over 'Further Loan Tightening'

The government plans to introduce an 'Advanced Household Debt Management Plan' in the first quarter to establish a screening practice focused on repayment ability. Considering the rapid increase in credit loans at the beginning of the year, there are expectations that a stronger-than-anticipated plan will be announced soon.

A bank official predicted, "Given that it may soon become difficult to obtain loans again, demand to borrow as much as possible quickly is likely to continue steadily for the time being."

Meanwhile, according to the 'Financial Market Trends for December 2020' released by the Bank of Korea the day before, the household loan balance at banks as of the end of December last year was 988.8 trillion won, an increase of 100.5 trillion won compared to a year earlier. This is the largest increase since statistics began in 2004.

A Bank of Korea official explained, "It is estimated that the overall increase in housing transactions last year, along with various living expense demands and funds for subscription to public offerings and stock purchases, collectively influenced the increase in household loans last year."

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