Last Year Loan Increase of 187 Trillion Won 'Record High'... Real Estate and Retail Sectors Show Largest Growth

Announcement of 'Quarter 4 Industrial Loans by Deposit-Taking Institutions'

[Asia Economy Reporter Seo So-jeong] Last year, it was revealed that companies and self-employed individuals accumulated debt exceeding 187 trillion won due to the impact of COVID-19. The outstanding loans in the service sector surpassed 1,027.2 trillion won, exceeding 1,000 trillion won for the first time since statistics began.

According to the '2021 Q4 Depository Institutions Industry Loans' statistics released by the Bank of Korea on the 4th, as of the end of the fourth quarter last year, loans across all industries totaled 1,580.7 trillion won, an increase of 187.1 trillion won compared to the end of the previous year.

The year-on-year growth rate was 13.4%, the largest increase since the Bank of Korea began compiling related statistics in Q1 2008. Compared to the end of Q3 last year, it increased by 50.1 trillion won.

In particular, outstanding loans in the service sector rose significantly from 880.8 trillion won to 1,027.2 trillion won, an increase of 146.4 trillion won. Among service industries, real estate (+44.3 trillion won) and wholesale and retail trade (+36.6 trillion won) recorded the largest increases ever. Manufacturing sector loans increased by 22.5 trillion won last year.

Song Jae-chang, head of the Financial Statistics Team at the Bank of Korea’s Economic Statistics Bureau, explained, "It is estimated that loans increased due to poor business conditions in the wholesale and retail trade sector caused by COVID-19. The increase in real estate loans is attributed to the impact of loan regulations, where poor conditions in the housing sector led to relatively increased investment in commercial real estate."

By loan purpose, working capital loans used to maintain business operations such as labor costs and raw materials increased by 106.8 trillion won last year. Facility loans rose by a record 80.3 trillion won, reflecting demand for commercial real estate investment.

Due to government loan regulations, loan demand from self-employed individuals shifted to the secondary financial sector. Loans from deposit banks increased by 96.7 trillion won last year, while loans from non-bank deposit-taking institutions rose by 90.4 trillion won, marking the largest increase ever.

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