February Bank Household Loans Down 2.7 Trillion Won, 'Largest Ever Decrease'... First Decline in Mortgage Loans Since 2014

Bank of Korea, Financial Market Trends in February
Jeonse Loan Sees Largest Decline Since January 2016

[Image source=Yonhap News]

Last month, bank household loans decreased by 2.7 trillion won, marking the largest decline ever recorded for February since statistics began in January 2004.

Mortgage loans also turned to a decline for the first time since January 2014, due to a significant drop in Jeonse deposit loans.

According to the "Financial Market Trends in February" released by the Bank of Korea on the 9th, bank household loans (including policy mortgage loans) decreased by 2.7 trillion won compared to the previous month, as mortgage loans shifted to a downward trend and other loans continued to decline. This is the largest decrease since preliminary statistics began in January 2004.

Mortgage loans fell by 300 billion won, marking the first decline since January 2014. Although demand for funds related to home purchases and group loans increased, Jeonse deposit loans dropped sharply by 2.5 trillion won. This represents the largest decrease in Jeonse deposit loans since statistics began in January 2016.

Other loans continued to decline by 2.4 trillion won due to high loan interest rates and loan regulations. The decrease narrowed as seasonal factors such as the inflow of bonuses in January subsided.

Bank corporate loans increased by 5.2 trillion won. This is the third largest increase for February since preliminary statistics began in June 2009.

Loans to large corporations increased by 900 billion won, a reduced growth due to the disappearance of January seasonal factors (such as the re-borrowing of year-end lump-sum repayments) and a slowdown in loan demand following expanded corporate bond issuance.

Loans to small and medium-sized enterprises surged by 4.3 trillion won, with the increase expanding due to some banks' efforts to extend loans.

Loans to individual business owners rose by 1.4 trillion won, turning to an upward trend.

Corporate bonds saw net issuance expand to 4.3 trillion won due to improved issuance conditions driven by strong demand for corporate bond investments. Commercial paper (CP) and short-term bonds shifted to net repayments (-1.7 trillion won from 6.9 trillion won) due to factors such as refinancing issuance during the month.

Bank deposits increased by 22.3 trillion won, mainly driven by demand deposits.

Demand deposits rose by 21.4 trillion won as corporate settlement funds and funds from other financial institutions flowed in.

Time deposits slightly increased by 2.4 trillion won (from -900 billion won) despite withdrawals of corporate and household funds due to falling deposit interest rates, as funds from local governments flowed in.

Deposits at asset management companies increased by only 800 billion won, significantly narrowing the growth.

Money Market Funds (MMFs) turned to a decrease due to outflows of treasury funds for fiscal execution.

Equity funds saw an inflow of 1.2 trillion won, while bond funds increased by 300 billion won, with the growth narrowing.

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