'Surviving on Debt'... Corporate and Self-Employed Loans Surge by 64 Trillion Won

Bank of Korea Q1 Loan Statistics by Industry for Deposit-Taking Institutions

[Image source=Yonhap News]

Loans to self-employed individuals and businesses significantly increased in the first quarter of this year.

According to the Bank of Korea's announcement on the 3rd, the outstanding industrial loans from deposit-taking institutions at the end of the first quarter of this year amounted to 1,644.7 trillion won, an increase of 63.9 trillion won (4.0%) compared to the previous quarter. This is the largest increase since the 69.1 trillion won (5.5%) rise in the second quarter of 2020, during the early spread of COVID-19.

Compared to the same period last year, loans increased by 208.9 trillion won (14.5%), marking the highest increase on record.

By industry, both manufacturing and service sectors saw an expanded increase compared to the previous quarter.

The outstanding loans in manufacturing reached 428.5 trillion won, up 13.2 trillion won (3.2%) from the previous quarter. This is a significant increase compared to the 2.8 trillion won rise in the previous quarter.

The Bank of Korea explained, "The increase expanded compared to the previous quarter due to the deepening global supply disruptions caused by the Ukraine invasion and the continued rise in raw material prices."

Within manufacturing, the increase expanded in chemical and medical products (from 1.2 trillion won to 2.8 trillion won), and sectors such as electrical equipment (from -100 billion won to 1.3 trillion won), metal processing products (from -200 billion won to 900 billion won), and other machinery and equipment (from -1 trillion won to 700 billion won) turned to positive growth.

The outstanding loans in the service sector reached 1,073.6 trillion won, with the increase significantly rising from 40.4 trillion won to 46.4 trillion won compared to the previous quarter. This is the second-largest increase (4.5%) since the second quarter of 2020 (6.1%).

The increase was mainly driven by real estate (from 11.2 trillion won to 13.3 trillion won), wholesale and retail trade (from 10.5 trillion won to 11.8 trillion won), information and communication (from 1.1 trillion won to 2.7 trillion won), and accommodation and food services (from 1.9 trillion won to 2.5 trillion won).

The Bank of Korea explained, "The expansion compared to the previous quarter was due to increased demand for working capital following the resurgence of COVID-19 and the supply of COVID-related financial support funds."

By financial sector, loans from non-bank deposit-taking institutions expanded more significantly.

The increase in loans from deposit banks rose from 21.7 trillion won to 28.1 trillion won compared to the previous quarter, while non-bank deposit-taking institutions saw an increase from 28.3 trillion won to 35.8 trillion won. The increase from non-bank deposit-taking institutions is the highest on record.

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