Household Loan Targets to Be Announced Next Month... 'Total Lending Penalty' Unavoidable for KB and Others That Exceeded Quota

Saemaul Geumgo Exceeded Target by Fourfold... Expected to Face 'Zero Net Increase' Penalty
KB Kookmin Bank Surpasses Target by 120 Billion Won, to Be Deducted from Next Quota
Tighter Oversight by Authorities Hits Bank Interest Income and Prompts

The financial authorities will announce measures to manage household debt next month, along with setting individual limits on household loan growth for each bank. Saemaul Geumgo and KB Kookmin Bank, which exceeded last year’s household loan growth targets, are highly likely to see their total household lending shrink or face restrictions on issuing new loans this year. As interest income is a core source of profit for banks, this is expected to force a change in their business strategies.

According to the Financial Services Commission on March 10, the household debt management plan to be announced next month includes a proposal to set household loan growth targets for each bank. The announcement, which was originally scheduled for the end of February, was postponed to the end of this month, and then delayed again to April. This is believed to be due to the need for additional adjustments to the total household loan growth rate target, following the inclusion of stronger regulations on loans to multiple homeowners and rental business operators.

However, the specific household loan targets for each bank have not yet been finalized. An official from the financial authorities said, “The bank-by-bank targets will be presented together when the household loan management plan is announced next month,” adding, “At this point, the concrete figures have not been determined.”

The household loan targets for each bank are structured to reflect the previous year’s performance. For example, if last year’s target was 10 trillion won but lending increased by 1 trillion won beyond that, the excess is deducted when setting this year’s target. In such cases, the banks’ capacity for new loans could be relatively reduced.

Meanwhile, there is a possibility that Saemaul Geumgo will be subject to regulations that prevent any increase in its total household lending this year. This is because it significantly exceeded the household loan growth target set by the financial authorities last year. Saemaul Geumgo increased its household loans by 5.31 trillion won year-on-year last year, more than four times its originally submitted target. The financial authorities had previously announced that they would impose penalties on financial institutions that exceeded their household loan growth targets, by deducting the excess amount from this year’s lending quota.

KB Kookmin Bank is also expected to face such a total lending penalty. Last year, KB Kookmin Bank’s household loan growth was 2.127 trillion won, exceeding its annual target of 2.061 trillion won. The excess of 120.9 billion won is expected to be deducted from this year’s lending total once the annual target is finalized. Although the excess amount is not large, KB Kookmin Bank was the only one among the five major banks to surpass its target. This is attributed to a faster-than-expected increase in demand for mortgage loans in the second half of last year.

A KB Kookmin Bank official explained, “Because we have the largest customer base and outstanding loan balance, we had to be cautious about implementing restrictions, considering possible market shocks. As a result, the introduction of restrictions was relatively delayed, causing a concentration of loan demand and leading to a partial excess over the target.” The official added that since the excess was not substantial and the bank had been continuously preparing for such regulations, the business environment is not expected to differ significantly from last year.

The delay in finalizing annual targets is making it difficult for banks to establish their management plans. If their lending capacity is reduced, they will inevitably have to revise their credit growth plans and overall profit structures. In fact, as of the third quarter of last year, the net interest margin (NIM) of domestic banks had stagnated, and the total loan growth rate had sharply declined from 8.8% in the same period of the previous year to 3.6%, indicating weakened profit-generating ability.

Kim Youngdo, Senior Research Fellow at the Korea Institute of Finance, analyzed, “In 2026, as household debt management is tightened, competition among banks for corporate lending will intensify. In addition, heightened competition for deposits with securities companies and the secondary financial sector will drive up funding costs, exposing the banking industry’s profit structure to structural risks.”

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