Banks Turn to Corporate Loans... Internet Banks Join In Too

[Asia Economy Reporter Yu Je-hoon] As the government begins managing household loans by strengthening the total loan volume control system, banks are turning their attention to corporate loans. In particular, not only commercial banks but also internet banks are expected to actively enter the corporate loan market, including loans to individual business owners, starting this year, further expanding the related market.

According to the financial sector on the 13th, the outstanding balance of corporate loans (large corporations, small and medium enterprises, individual business owners) at the five major commercial banks (KB Kookmin, Shinhan, Woori, Hana, NH Nonghyup Bank) last month was 644.0618 trillion KRW. This is an increase of 8.174 trillion KRW (1.28%) compared to the previous month.

By borrower type, loans to large corporations increased by 2.32% (1.9139 trillion KRW) to 84.3232 trillion KRW, loans to small and medium enterprises rose by 1.80% (4.5748 trillion KRW) to 258.3318 trillion KRW, and SOHO (individual business owner) loans increased by 0.56% (1.6854 trillion KRW) to 301.4069 trillion KRW.

The reason banks are turning their attention to corporate loans is that it has become difficult to expand household credit due to the government's total household loan volume control policy. According to the Bank of Korea and others, total household loans across all financial sectors decreased by 700 billion KRW last month, marking the first decline in eight months since May of last year.

An official from a commercial bank said, "The strengthening of the total household loan volume control has weakened the growth momentum in the household credit sector," adding, "For each bank, it is a natural trend to expand business into corporate credit or asset management sectors rather than limited household credit."

Commercial banks are also expanding their scope by reorganizing departments related to corporate loans. KB Financial Group recently indicated a 7% growth rate in corporate loans for this year during its earnings conference call, and NH Nonghyup Bank expanded its metropolitan area corporate finance centers by about 30% to 65 locations, focusing on targeting facility fund demand in the metropolitan area.

Recently, internet banks have also been actively entering the corporate credit market. For example, Toss Bank plans to launch individual business owner loans this month. Toss Bank is the first among internet banks to offer loans to individual business owners. Additionally, KakaoBank and K Bank also plan to enter the corporate loan market within the year to diversify their loan portfolios.

The financial investment industry also expects corporate credit from commercial and internet banks to expand this year. Hanwha Investment & Securities stated in a recent report, "The banking sector is expected to pursue growth centered on corporate SME loans," adding, "This year, the growth rate of won-denominated loans in the banking sector is expected to be around 5-6% compared to the previous year, achieving a net increase of about 120 trillion KRW."

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