Following NongHyup, Commercial Banks Also Consider Reducing Credit Loan Limits to 'Within Annual Income'

Financial Authorities "Submit Product-Specific Limit Adjustment Plans by the 27th"

[Asia Economy Reporter Kwangho Lee] Following NH Nonghyup Bank, other major banks are also considering reducing the maximum credit loan limit to within the borrower's annual income in response to financial authorities' pressure to manage household loans.

According to the financial sector on the 26th, the Financial Supervisory Service recently requested commercial banks to submit by the 27th a report detailing the maximum limits for each personal credit loan product and plans for future loan limit adjustments.

Specifically, the report must include information such as how many times the maximum personal credit loan limit is relative to salary, how the limits will be reduced going forward, and reasons if the limits cannot be reduced.

Commercial banks are collectively considering reducing personal credit loan limits to within the annual income. It is expected that they will take similar measures to Nonghyup Bank, which from the 24th reduced the maximum personal credit loan limit from 200 million KRW to below 100 million KRW, or 100% of annual income.

As of the end of last month, Nonghyup Bank's household loan growth rate was 7.1% compared to the end of the previous year, exceeding the target recommended by financial authorities (5-6% year-on-year). Without taking strong measures such as temporarily halting loans, it is impossible to meet the total volume regulation.

Other banks are in a somewhat better situation but still require management considering the loan growth trend. Compared to the end of last year, Hana Bank increased by 4.4%, Woori Bank by 2.9%, KB Kookmin Bank by 2.6%, and Shinhan Bank by 2.2%.

Kakao Bank, which has seen a credit loan growth rate in the double digits this year, is also reviewing plans to reduce credit loan limits to within annual income.

An official from a bank said, "The financial authorities requesting the plan is a signal to manage loans within annual income, and banks are trying to reduce the limits as much as possible."

He added, "Since there is a rush demand to take loans in advance due to news of loan suspension, additional measures such as adjusting the limits on overdraft accounts may also be implemented."

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