Last Month, Bank Household Loans Decreased by 4.6 Trillion Won... Largest Ever Decline

January Sees First Decrease in Personal Business Loans
Bank Deposits Plunge by 45.4 Trillion Won

[Image source=Yonhap News]

[Asia Economy Reporter Seo So-jeong] Last month, bank household loans decreased by 4.6 trillion won, marking the largest decline since statistics began in January 2004.

According to the "Financial Market Trends in January" released by the Bank of Korea on the 9th, bank household loans (including policy mortgage loans) decreased by 4.6 trillion won compared to the previous month, as the increase in mortgage loans slowed and other loans continued to decline. This is the largest decrease since preliminary statistics were first compiled in January 2004.

Mortgage loans maintained the previous month's level as the increase in individual loans slowed and jeonse deposit loans decreased by 1.8 trillion won.

Other loans decreased by 4.6 trillion won, marking the second-largest decline since preliminary statistics were first compiled in January 2004.

Yoon Ok-ja, Deputy Director of the Market General Team at the Bank of Korea's Financial Market Department, explained, "The decline was amplified by higher interest rates, strengthened loan regulations, and seasonal factors such as the inflow of holiday bonuses."

Bank corporate loans increased by 7.9 trillion won due to year-end lump-sum repayments being reissued and demand for value-added tax payments.

Loans to large corporations turned to an increase, rising by 6.6 trillion won as working capital that was repaid in a lump sum at year-end was reissued.

Loans to small and medium-sized enterprises (SMEs) increased by 1.3 trillion won, mainly driven by SME corporate loans due to demand related to value-added tax payments.

Loans to individual business owners decreased by 900 billion won, expanding the decline due to high loan interest rates and weakened demand for funds related to real estate purchases. This marks the first decrease since June 2009, when preliminary statistics were first compiled for January.

Corporate bonds expanded their net issuance to 3.2 trillion won due to the resumption of institutional fund management at the beginning of the year. Commercial paper (CP) and short-term bonds also increased sharply from 1.5 trillion won to 6.9 trillion won, mainly in high-quality issues.

Bank deposits decreased sharply by 45.4 trillion won.

Demand deposits decreased by 59.5 trillion won, marking the largest decline since preliminary statistics were first compiled in January 2002. This was due to the outflow of corporate funds temporarily inflowed the previous month, value-added tax payments, and weakened incentives for banks to raise funds.

Time deposits (-15.1 trillion won → -9 trillion won) slightly decreased due to the impact of falling deposit interest rates.

Asset management company deposits increased sharply by 51.4 trillion won. Money Market Funds (MMFs) increased due to the reinvestment of bank funds, management of surplus treasury funds, interest rate merits, and inflows of corporate funds.

Equity funds turned to an increase with an inflow of 4.1 trillion won, while bond funds and other funds increased by 2 trillion won and 6.9 trillion won respectively, expanding the scale of growth.

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