Household Loan Growth Eases in June... Limited to 1.3 Trillion Increase

Eun Sung-soo, Chairman of the Financial Services Commission, is delivering opening remarks at the 'Hetsalron Bank Business Agreement and Meeting' held at the Korea Inclusive Finance Agency on the 1st. Photo by Financial Services Commission

[Asia Economy Reporter Kiho Sung] Last month, the outstanding household loans at major commercial banks increased by about 1.3 trillion KRW, showing a modest growth. It was expected that many would take out loans in advance before the implementation of the individual Debt Service Ratio (DSR) regulation starting in July, but this does not appear to be the case.

According to the financial sector on the 1st, the outstanding household loans at the five major commercial banks?KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup?as of the end of June stood at 689.1073 trillion KRW. This is an increase of approximately 1.2996 trillion KRW compared to the previous month (687.8076 trillion KRW).

The outstanding household loans at major banks peaked in April (690.8623 trillion KRW) due to increased loan demand for SKIET IPO subscription deposits, then decreased in May for the first time in 4 years and 3 months. However, last month saw a slight increase, indicating a stabilization trend. At the end of April, the increase had reached 9.2266 trillion KRW.

As of the end of June, the outstanding personal unsecured loans at commercial banks were 139.0294 trillion KRW, a modest increase of 53.82 billion KRW from the previous month (138.4911 trillion KRW). Mortgage loans also rose by 65.18 billion KRW to 485.76 trillion KRW from 485.1082 trillion KRW the previous month.

The banking sector expects that household loans will not increase significantly for the time being as financial authorities accelerate regulations related to household loans. Previously, the financial authorities urged commercial banks to manage loans ahead of the July implementation of the individual DSR 40% regulation.

In response, banks are managing loans by reducing preferential interest rates or suspending the sale of some loan products.

On the same day, Financial Services Commission Chairman Eun Sung-soo, after signing the Sunshine Loan Bank agreement with the heads of 13 commercial banks at a meeting, emphasized, "In a low-interest-rate environment, it is a time when managing interest rate rise risks is necessary, and meticulous household debt management is required in the second half of the year. Since the bank presidents are gathered here, I would like to make a special request to minimize unnecessary household loan issuance."

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