Year-End Decline in Household and Corporate Loans at 5 Major Banks... Time Deposits Also Decrease

Corporate Loans of 5 Major Commercial Banks Decreased by Approximately 6.6 Trillion Won as of the End of December Last Year

[Asia Economy Reporter Yu Je-hoon] Last month, corporate loans at major banks showed a declining trend. This is interpreted as a result of the government's market stabilization policies leading to some stabilization in the bond market, which improved the liquidity crunch faced by companies.

According to the financial sector on the 2nd, the outstanding balance of large corporate loans at the five major commercial banks (KB Kookmin, Shinhan, Hana, Woori, NH Nonghyup) was 105.5174 trillion won as of the end of last month. This is a decrease of 5.8102 trillion won compared to the end of the previous month (111.3276 trillion won). Loans to small and medium-sized enterprises also decreased by 8.843 billion won to 598.2095 trillion won.

The decrease in outstanding loans to both large corporations and SMEs was only seen in December last year throughout the entire year. After the Legoland incident, companies faced difficulties issuing corporate bonds and shifted to bank loans as a means of securing funds, leading to a steady increase in corporate loans in the second half of last year. Subsequently, with the government's market stabilization measures such as the corporate bond and commercial paper (CP) purchase programs, the bond market has recently regained some stability. This is interpreted as a reduction in loan demand from companies whose financial conditions have improved.

However, the overall loan growth trend was clear. Compared to the end of the previous year, loans to large corporations and SMEs increased by 23.1081 trillion won and 44.7309 trillion won, respectively.

Household loans continued to decline due to weakness in the real estate market. The outstanding balance of household loans at the five major banks was 692.5335 trillion won, down 50.11 billion won from the previous month and 16.5194 trillion won from the same month last year. By loan type, mortgage loans increased by 2.3782 trillion won from the previous month to 513.1416 trillion won, but personal credit loans and jeonse deposit loans showed a declining trend. Personal credit loans decreased by 2.6125 trillion won to 118.9763 trillion won, and jeonse deposit loans fell by 1.0776 trillion won to 131.987 trillion won.

The outstanding balance of time deposits at the five major banks decreased by 8.862 trillion won from the previous month to 818.4366 trillion won, marking the first decline since March last year. However, compared to the same month last year, it increased by a whopping 163.5007 trillion won. Demand deposits, known as 'core deposits,' also continued to decline, decreasing by 5.072 billion won to 605.8455 trillion won.

[Image source=Yonhap News]

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