Bank Household Loans Resume Growth After Hesitation... Corporate Loans Also Surge

Bank of Korea, Financial Market Trends in August
Corporate Loans Increase by 8.7 Trillion KRW
Largest August Increase on Record

[Image source=Yonhap News]

[Asia Economy Reporter Seo So-jeong] Bank household loans, which had turned to a decline due to the impact of the base interest rate hike, switched back to an increase after one month. Bank corporate loans also increased by more than 8 trillion won, recording the largest increase for August since the statistics began.

According to the "Financial Market Trends in August" released by the Bank of Korea on the 8th, last month, bank household loans (including policy mortgage loans) increased by 300 billion won compared to the previous month as the increase in housing-related loans continued and the decrease in other loans narrowed. However, the amount of change was the smallest for August since the related statistics began.

Mortgage loans increased by 1.6 trillion won as loans for group housing and jeonse deposits continued despite a slowdown in demand for housing-related funds due to a decrease in housing transactions.

However, other loans decreased by 1.3 trillion won due to rising loan interest rates and continued government loan regulations. This is the first time that other loans have decreased in August since the related statistics began.

Bank corporate loans increased by 8.7 trillion won as COVID-19 financial support, demand for facility funds, and banks' efforts to handle corporate loans continued.

Hwang Young-woong, Deputy Head of the Market General Team at the Bank of Korea's Financial Market Department, explained, "Bank corporate loans recorded the highest level for August since the related statistics began. Although the increase compared to the previous month narrowed due to the disappearance of seasonal factors, it remains at a high level compared to previous years."

Loans to large corporations (5.4 trillion won → 2.9 trillion won) continued to increase due to demand for corporate loans amid worsening conditions for corporate bond issuance. Loans to small and medium-sized enterprises (6.8 trillion won → 5.8 trillion won) increased significantly due to ongoing COVID-19 financial support and demand for working and facility funds from small and medium-sized corporations. Deputy Head Hwang said, "Loans to large and small-medium enterprises recorded the third largest increase for August since the related statistics began."

Corporate bonds slightly shifted to net issuance (from -1.5 trillion won to 300 billion won) due to issuance through public institutions amid continued contraction in investment demand, and CP and short-term bonds (from 1.2 trillion won to 3.5 trillion won) saw expanded net issuance mainly by some public enterprises.

Bank deposits turned to an increase of 8.7 trillion won last month from -10.3 trillion won in July as time deposits rose significantly despite a decrease in demand deposits.

Demand deposits (-53.3 trillion won → -15.3 trillion won) decreased significantly, mainly household funds, due to the shift of funds to savings deposits following the base interest rate hike.

On the other hand, time deposits (31.7 trillion won → 21.2 trillion won) increased sharply due to inflows of household and corporate funds and local government funds following the rise in deposit interest rates.

Asset management company deposits increased by 1 trillion won in August alone.

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