Will the Loan Freeze Return?... Banks Consider Regulatory Measures Amid Surge in Credit Loans (Comprehensive)

Shinhan Bank Raises Bar for Jeonse and Credit Loans
Other Banks Also Considering Limit Reductions and Regulatory Measures
Employees Postponing Home Purchase May Flock More to Stock Market

Reference image of bank loan counter

[Asia Economy Reporter Kim Hyo-jin] With the resurgence of the 'Debt Investment (borrowing to invest in stocks)' craze at the start of the new year, a sharp increase in credit loans has reappeared, and as financial authorities continue to issue management orders, moves to regulate loans in the banking sector are becoming more visible.

As Shinhan Bank has proactively started management, there is speculation that if other banks follow suit with regulatory measures, another wave of loan tightening could occur following the end of last year.

According to the banking sector on the 19th, Shinhan Bank raised the interest rates on jeonse (key money deposit) loans starting today to manage the total volume of household loans. This includes lowering the preferential interest rates by 0.1 percentage points for each category on Shinhan Jeonse Loans guaranteed by Seoul Guarantee Insurance, and reducing the product adjustment rate by 0.1 percentage points on Shinhan Jeonse Loans guaranteed by the Korea Housing Finance Corporation and Housing and Urban Guarantee Corporation. Lowering preferential interest rates effectively raises the loan interest rates by the same amount.

Additionally, Shinhan Bank lowered the limits on four credit loan products, including 'Elite Loan I & II' and 'Solpyeonhan Office Worker Loan S I & II,' which are targeted at employees of designated companies, from 150 million to 200 million KRW down to 100 million to 150 million KRW. Shinhan Bank explained that this adjustment was made due to the overheated stock market and increasing household debt since the beginning of the year, necessitating a partial adjustment of high-value credit loan limits.

Other major banks are also analyzing recent loan handling trends and considering additional regulatory measures beyond existing management plans. A representative from Bank A said, "We are reviewing various options including interest rate hikes in response to government orders," adding, "There is a possibility that these will be applied to major credit loan products soon."

Bank B plans to expand the target products and raise interest rates if measures such as limit reductions, maintained since the end of last year, fail to produce significant effects. A representative from Bank C explained, "We are closely monitoring daily loan handling status, especially for products targeting professionals," and added, "We will decide on additional regulations based on future trends."

Credit Loans at 5 Major Banks Jump by 1.8804 Trillion KRW in Two Weeks
Demand Deposits Decrease by 11.75 Trillion KRW This Year

The balance of credit loans in the banking sector has shown a sharp increase similar to last year until mid-this month. As of the 14th, the credit loan balance at the five major banks?KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup?stood at 135.5286 trillion KRW, up 1.8804 trillion KRW from 133.6482 trillion KRW at the end of December last year.

Since the beginning of this year until the 14th, 20,588 new overdraft accounts were opened at the five major banks alone, and the balance of overdraft credit loans rose by 1.6602 trillion KRW from 46.531 trillion KRW at the end of December last year to 48.1912 trillion KRW.

On the other hand, deposits and savings have noticeably decreased. The balance of time deposits at the five major banks, which was 640.7257 trillion KRW at the end of October last year, dropped by 9.7399 trillion KRW to 630.9858 trillion KRW as of the 14th of this month. The balance of installment savings, which was 41.4277 trillion KRW at the end of November last year, also decreased by 2.337 billion KRW to 41.194 trillion KRW as of the 14th.

Demand deposits, which are freely accessible and often serve as waiting funds yet to find investment destinations, decreased by 11.7575 trillion KRW from 615.5798 trillion KRW at the end of December last year to 603.8223 trillion KRW as of the 14th this year.

A bank official said, "Demand for credit loans is continuing as people rush to borrow for stock investment, and the 'money move'?the rapid transfer of funds from time deposits and savings to the stock market?is also accelerating," adding, "Young office workers who have postponed plans to buy homes due to soaring housing prices may continue to flock to the stock market, so this trend could persist for some time."

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