Diverging Household Loans... Decreasing at 5 Major Banks, Increasing at Internet Banks

Online Banks Raise Loans for Low-to-Mid Credit Borrowers Amid Financial Authorities' Pressure
Refinancing Demand Also Increases... Various Interest Support Events Have Impact
Commercial Bank Loans Decline for 4 Consecutive Months

[Image source=Yonhap News]

[Asia Economy Reporter Minwoo Lee] This year, while major commercial banks have seen a decrease in household loans, internet-only banks have experienced an increase in household loans.

According to the financial sector on the 8th, the total household loan balance of the three internet-only banks?KakaoBank, K Bank, and Toss Bank?stood at 37.2718 trillion KRW as of the end of last month. This is an increase of 1.1279 trillion KRW compared to the previous month. It marks the fourth consecutive month of growth this year and is the largest increase since January, when it rose by 1.1916 trillion KRW.

This is interpreted as a steady increase in loan balances due to expanded lending to low- and medium-credit borrowers. It is seen as an effect of financial authorities pressuring banks to increase loans to these credit groups. Previously, in May last year, financial authorities criticized internet-only banks for conducting conservative lending focused on high-credit borrowers, contrary to their original establishment purpose of expanding loan supply to low- and medium-credit groups. Additionally, aggressive promotions such as "first month interest support" appear to have influenced low- and medium-credit borrowers from the secondary financial sector to switch their loans.

Accordingly, KakaoBank and K Bank have increased their share of loans to low- and medium-credit borrowers from 17.0% and 16.6% respectively until last year to the 20% range this year. Toss Bank, which had the most respectable share of 23.9% at the end of last year, recently raised it to the 33% range.

Meanwhile, in contrast, the five major commercial banks?KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup?have seen a steady decrease in household loan balances this year. The household loan balance of these five major banks stood at 702.3917 trillion KRW at the end of last month, down by 80.2 billion KRW from the previous month. This marks the fourth consecutive month of decline following decreases of 1.3634 trillion KRW in January, 1.8522 trillion KRW in February, and 2.7436 trillion KRW in March. Although mortgage loans and jeonse (key money deposit) loans increased, the decline in unsecured loans appears to have influenced the overall decrease.

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