Savings Banks' Loan Balance Increased by 7.4 Trillion Won in 5 Months

Goddess Balance Reaches 85.1114 Trillion Won

[Asia Economy Reporter Kim Jin-ho] The loan balance of domestic savings banks has increased by more than 7 trillion won in five months. However, the growth is not expected to continue in the second half of this year as financial authorities have announced plans to strengthen regulations.

According to statistics from the Bank of Korea's Economic Statistics System on the 18th, as of the end of May, the loan balance of domestic savings banks stood at 85.1114 trillion won. This represents an increase of 7.4439 trillion won over five months compared to the end of last year (77.6675 trillion won).

The month-on-month increase in savings bank loans was about 1.6 trillion won in January, 1.3 trillion won in February, 1.4 trillion won in March, and 1.9 trillion won in April, before slightly decreasing to 1.2 trillion won in May. From July last year to May this year, the loan balance has increased by more than 1 trillion won month-on-month for 11 consecutive months.

This significant growth is largely due to savings banks actively expanding mid-interest rate loans in the mid-teens annually since last year. Ahead of the legal maximum interest rate reduction (from 24% per annum to 20% per annum) that started on the 7th of this month, they preemptively lowered loan interest rates.

However, the sharp increase in savings bank loans is not expected to continue in the second half of this year. At the end of May, the Financial Supervisory Service sent guidelines to each savings bank to manage this year's household loan growth rate at 21.1%, the same as last year, and to limit the growth rate of high-interest household loans excluding mid-interest loans and policy financial products (such as Haetsal Loan and Saetdol) to 5.4%.

Additionally, on the 15th, Do Gyu-sang, Vice Chairman of the Financial Services Commission, stated at the first video meeting of the 'Household Debt Risk Management Task Force (TF)' that they are closely monitoring the loan growth in the non-bank sector, including savings banks. The Financial Services Commission announced that if the increase in household loans in the non-bank sector, driven by regulatory arbitrage, continues, they will consider measures to promptly eliminate regulatory arbitrage between banks and non-bank sectors.

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