Industrial Loans Increase by 27 Trillion Won in Q1... Expansion of Growth Rate

Industrial loans increased as corporate funding demand grew, mainly in the manufacturing sector, during the first quarter.

According to the '2024 Q1 Depository Institutions Loans by Industry' statistics released by the Bank of Korea on the 7th, the outstanding loans by depository institutions by industry stood at 1,916.6 trillion KRW at the end of the first quarter, up 27 trillion KRW from the previous quarter. This increase was larger compared to the 13.9 trillion KRW recorded in the previous quarter.

The Bank of Korea evaluated that the increase was due to depository banks strengthening corporate loan operations and a rise in companies' working capital demand compared to the previous quarter.

By industry, manufacturing loans returned to an upward trend within the first quarter. Manufacturing loans increased by 12.2 trillion KRW compared to the previous quarter, marking the largest increase since Q2 2020.

Within manufacturing sectors, loans increased mainly in chemicals, medical products, electronics, and computers, with both working capital and facility funds rising.

Seo Jeong-seok, head of the Bank of Korea’s Financial Statistics Team, said, "Manufacturing loans decreased at the end of last year due to soundness management, but there was a recovery trend in the first quarter," adding, "Demand for both working capital and facility funds increased simultaneously in line with the improving economic conditions."

Service industry loans in the first quarter increased by 11 trillion KRW, a smaller increase compared to the previous quarter. While wholesale and retail trade and construction sectors saw expanded increases, real estate and financial sectors experienced a reduced growth rate.

The real estate sector’s increase narrowed due to a slowdown in commercial real estate transactions compared to the previous quarter, and the financial and insurance sectors saw a decrease in growth due to a slowdown in borrowing from depository banks by other financial institutions such as credit card companies. Construction turned to an increase as construction investment rose compared to the previous quarter, boosting funding demand.

Looking at total industrial loans by purpose, the growth rate of working capital loans expanded significantly from 500 billion KRW in the previous quarter to 14.7 trillion KRW in the first quarter. This was influenced by increased growth in manufacturing, construction, and service sectors.

Facility funds saw a slight decrease in growth. While manufacturing, centered on the IT sector, showed an expanded increase, service sector growth narrowed and construction turned to a decrease.

By financial institution type, depository banks relaxed their corporate lending stance, leading to an expanded increase, whereas non-bank depository institutions maintained a risk management strengthening policy, resulting in only a slight increase compared to the previous quarter.

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