Domestic Banks' Personal Business Loans Up 15% in One Year... "Need for Soundness Monitoring"

A counter at a commercial bank in Seoul (Photo by Yonhap News)

[Asia Economy Reporter Kwangho Lee] Due to the impact of COVID-19, the outstanding balance of personal business loans in the banking sector has surged, raising concerns about the need for soundness monitoring.

On the 21st, according to the financial sector, the Korea Deposit Insurance Corporation (KDIC) stated this in its recently published quarterly report, "Financial Risk Review."

According to KDIC, as of the end of March this year, the total outstanding balance of personal business loans at 16 domestic banks was 397.7 trillion KRW, a 14.5% increase compared to the end of March last year.

Compared to the 7.9% increase in personal business loans between the end of 2018 and the end of 2019, the growth rate has doubled.

Among various corporate loan categories of banks, personal business loans showed the highest growth rate.

From the end of March last year to the end of March this year, bank loans to large corporations increased by 4.8%, loans to small and medium enterprises (SMEs) rose by 10.6%, and mortgage loan growth was only 9.8%. Only household credit loans showed a high annual growth rate of 17.9%.

On the other hand, looking at the delinquency rate, a soundness indicator, the delinquency rate for bank personal business loans was 0.21% as of the end of March this year, the same as at the end of last year. It has significantly improved compared to 0.29% at the end of 2019.

KDIC diagnosed, "Once financial support measures expire, there is a risk that the soundness of personal business loans may temporarily decline, especially among marginal borrowers," and added, "Continuous monitoring of the trends in financial support for these loans and asset soundness is necessary."

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