Household Bank Loans Increase by 5.1 Trillion Won in April...Turn to Growth After One Month

Bank of Korea's 'April Financial Market Trends'
Expansion of Mortgage Loan Growth and Shift to Increase in Other Loans
Also, Expansion of Bank Corporate Loan Growth

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Last month, bank household loans increased by 5.1 trillion won, marking a turnaround to growth in just one month. This was due to an expansion in mortgage loan growth driven by policy mortgages and interest subsidy-type policy loans, as well as a shift to an increase in other loans. Bank corporate loans also saw an expanded growth rate as banks continued their corporate loan expansion strategies.

According to the "Financial Market Trends for April 2024" released by the Bank of Korea on the 13th, bank household loans (including policy mortgage loans) increased by 5.1 trillion won in April compared to the previous month.

Bank household loans had been shrinking in growth scale from 6.7 trillion won in October last year, 5.4 trillion won in November, and 3.1 trillion won in December, then slightly increased by 3.3 trillion won in January this year, decreased growth to 1.9 trillion won in February, and declined by 1.7 trillion won in March.

Looking at the components of household loans, mortgage loans and other loans, mortgage loans expanded significantly from 500 billion won in the previous month to 4.5 trillion won in April. Other loans shifted from a 2.2 trillion won decrease in the previous month to a 600 billion won increase in April.

Won Ji-hwan, Deputy Head of the Market General Team at the Bank of Korea’s Financial Market Department, explained, “Housing sales transactions have increased since the beginning of this year, and with a time lag, these transactions have influenced mortgage loans, showing an increasing trend. The expansion of bank funding for Housing and Urban Fund policy loans also contributed to the increased growth in mortgage loans.” He added, “Other loans turned to a slight increase as the scale of credit loan repayments shrank and the effect of bad debt sales and write-offs from the previous month disappeared.” Typically, in the first quarter, large-scale credit loan repayments occur using surplus funds such as bonuses, followed by a tendency for repayment amounts to decrease thereafter.

In April, bank corporate loans increased by 11.9 trillion won, expanding the growth rate compared to the previous month (+10.4 trillion won). This is the third-largest increase since the compilation of related statistics in June 2009. The largest increase on record was in April 2020 (28.9 trillion won). Large corporate loans also expanded by 6.5 trillion won, up from 4.1 trillion won in the previous month. Small and medium-sized enterprise (SME) loans increased by 5.4 trillion won, slightly down from 6.2 trillion won in the previous month.

Deputy Head Won explained, “Large corporate loans expanded mainly due to funding demand related to dividend payments and re-borrowing of temporary repayments at the end of the quarter. SME loans continued to grow due to the impact of financial intermediation support loans, banks’ strengthened loan sales efforts, and value-added tax payment demand on April 25.”

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