"Continued Aggressive Sales"... 5 Major Banks' Corporate Loans Jump 6 Trillion Won in One Month

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The growth of corporate loans in the banking sector continues. As commercial banks seek opportunities in corporate loans, which are relatively free from regulatory restrictions compared to household loans, competition appears to be fierce.

According to the financial sector on the 6th, the outstanding balance of corporate loans (large corporations + small and medium-sized enterprises) at the five major banks (KB Kookmin, Shinhan, Hana, Woori, NH Nonghyup) stood at 776.71 trillion KRW as of the end of last month, an increase of 6.57 trillion KRW compared to the previous month. Compared to the end of February last year, it increased by 65.79 trillion KRW (about 9%).

The outstanding balance of large corporate loans was 141.81 trillion KRW, up 2.86 trillion KRW from the previous month, and increased by 30.75 trillion KRW (about 28%) compared to the previous year. In the case of large corporate loans, the increase amount rose slightly from 2.52 trillion KRW in January to 2.86 trillion KRW.

Loans to small and medium-sized enterprises, including sole proprietors, also recorded 634.90 trillion KRW, increasing by 3.71 trillion KRW from the previous month and by 35.03 trillion KRW (about 6%) compared to the previous year. In particular, loans to small and medium-sized enterprises have been steadily increasing since February last year. Loans to sole proprietors stood at 320.79 trillion KRW as of the end of last month, up 1.56 trillion KRW from the previous month and increased by 7.20 trillion KRW (about 2%) compared to the previous year.

This situation is interpreted as being influenced by the fact that although corporate bond interest rates have fallen, they remain high, and companies can obtain relatively low-interest loans thanks to various government supports. A representative from a commercial bank said, "Although interest rates are high these days, some companies receive bank loans at rates in the 2-3% range." According to the Korea Financial Investment Association, the 3-year corporate bond interest rate for A- grade bonds was 5.26% as of the previous day. However, the increase in large corporate loans is also temporarily affected by the concept of overdraft credit lines. For sole proprietors, additional loan demand is interpreted as a result of the worsening self-employed business conditions.

The banking sector's determination to focus on corporate loan operations is also a factor in the increase in outstanding balances. In particular, Hana Bank and Woori Bank are aggressively pursuing corporate loans. Hana Bank's corporate loan balance at the end of last month increased by 13% compared to the same period last year. This was followed by Woori (11%), KB Kookmin (8%), Shinhan (8%), and NH Nonghyup (6%). Another commercial bank official said, "If household loan growth is suppressed, corporate loans are the only answer," adding, "Banks continue to compete in corporate loans and increase lending."

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