Loan Growth by Industry in Q4 Last Year Shrinks for the First Time in Three Quarters

KRW 1,875.7 trillion... Up KRW 13.9 trillion

At the end of the fourth quarter last year, the increase in corporate loans narrowed for the first time in three quarters. In addition to seasonal factors due to year-end financial management by companies, it is analyzed that corporate funding support, which had increased during the COVID-19 pandemic, is returning to pre-pandemic levels.

According to the '2023 Q4 Depository Institutions Loans by Industry' statistics released by the Bank of Korea on the 7th, the outstanding loans by depository institutions by industry at the end of Q4 last year amounted to KRW 1,889.6 trillion, an increase of KRW 13.9 trillion compared to the end of the previous quarter.

The increase in loans by industry narrowed compared to KRW 20.9 trillion in Q1, KRW 24.8 trillion in Q2, and KRW 32.3 trillion in Q3 of last year. This was due to the temporary repayment of working capital loans for year-end corporate financial ratio management.

Seo Jeong-seok, head of the Financial Statistics Team at the Bank of Korea's Economic Statistics Bureau, evaluated the recent trend in loans by industry, saying, "Loans provided to companies during the COVID period are subsiding, and (loans by industry) are returning to a balanced state."

Looking at the industries, loans in manufacturing and construction decreased, while loans in the service sector increased.

The outstanding loans in manufacturing decreased by KRW 600 billion compared to the previous quarter. This was due to a decrease in working capital demand and a reduced increase in facility investment demand for year-end financial ratio management. Electronics, computers, audiovisual, and telecommunications increased by KRW 400 billion, but chemicals and medical products decreased by KRW 1.1 trillion.

The outstanding loans in construction decreased by KRW 800 billion compared to the previous quarter as funding demand declined due to a decrease in building construction.

The outstanding loans in the service sector increased by KRW 11.9 trillion compared to the previous quarter. Financial and insurance services increased by KRW 1.6 trillion due to expanded borrowing by credit card companies from deposit banks, but real estate saw a reduced increase from KRW 8 trillion in Q3 to KRW 5.6 trillion due to a slowdown in real estate transactions.

By financial sector, the increase in loans from deposit banks narrowed from KRW 30.4 trillion in Q3 to KRW 16.9 trillion, while loans from non-bank depository institutions decreased by KRW 3.1 trillion. Regarding the decrease in loans from non-bank depository institutions, Team Leader Seo explained, "It is because lending attitudes have been tightened due to concerns about asset soundness."

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