Economic Slowdown Impact... Record Low 'Household Loans and Corporate Fund Management' in Q1

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The scale of domestic net fund management in the first quarter of this year was 1.2 trillion won, showing a decrease compared to last year. In the case of households, loans significantly declined due to rising interest rates and a slowdown in the real estate market, while companies saw fund management fall to an all-time low amid the economic recession.

According to the preliminary fund circulation trends announced by the Bank of Korea on the 6th, the net amount of fund management and procurement in the domestic sector resulting from economic activities in the first quarter was recorded at 1.2 trillion won. This is a reduction compared to the same quarter last year (15.1 trillion won).

The net fund management scale is the value obtained by subtracting fund procurement from fund management, which is the transaction amount of financial assets. If this difference is positive (+), it means there is surplus fund and net management; if negative (-), it means a shortage of funds and net procurement. Due to seasonal patterns, comparisons are made with the same period of the previous year.

First, the net fund management scale of households and non-profit organizations was 76.9 trillion won, an increase compared to the same quarter last year (64.8 trillion won). Household income and consumption showed a favorable trend in the first quarter, but due to sluggish housing investment, the net management scale expanded compared to the first quarter of last year.

Regarding fund procurement, loan demand decreased significantly centered on loans due to rising loan interest rates and a slowdown in the real estate market. However, government loans expanded as the handling of housing and urban fund support rental loans increased. Loans for households and non-profit organizations are at an all-time low.

In fund management as well, influenced by rising interest rates, preference for safe assets, and poor stock market performance, the management of savings deposits and bonds increased, while management centered on stocks decreased.

Moon Hye-jeong, head of the Fund Circulation Team at the Bank of Korea's Economic Statistics Bureau, explained, "Both fund procurement and management for households decreased, but procurement decreased more significantly, leading to an expansion in net management."

For non-financial corporations, due to difficulties in corporate finances caused by reduced operating profits from sluggish exports, the scale of net procurement expanded from 35.3 trillion won in the first quarter of last year to 42.3 trillion won this year. This is because fund management decreased more than fund procurement.

Specifically, while bond issuance expanded mainly among private companies as conditions for corporate bond issuance improved, procurement decreased centered on loans due to high loan interest rates and negative economic outlooks reducing loan demand.

Fund management sharply decreased as demand for deposit withdrawals increased due to poor corporate performance and interest burden. Both fund management and deposits of non-financial corporations are at an all-time low.

The general government saw an increase in net procurement from 10.7 trillion won to 23.1 trillion won during the same period due to a decrease in national tax revenue caused by economic slowdown and contraction of the real estate market.

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