Five Major Banks' Household Loans Decrease After 10 Months... Impact of Early-Year Bonuses

An information board related to loans is posted at a commercial bank branch in Euljiro, Jung-gu, Seoul. Photo by Jo Yongjun jun21@

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Due to factors such as corporate bonus payments, household loans at major commercial banks decreased last month for the first time in 10 months.

According to the financial sector on the 2nd, the outstanding balance of household loans at the five major banks (KB Kookmin, Shinhan, Hana, Woori, NH Nonghyup) as of the 24th of last month was 732.3656 trillion won.

This is a decrease of 1.7694 trillion won compared to the end of December last year (734.135 trillion won). Considering the Lunar New Year holidays after the 24th, the total statistics for January are not expected to change significantly from the 732 trillion won level.

If the decrease in January is confirmed, it will be the first decline in 10 months since March last year.

By type of household loan, mortgage loans increased by 1.6592 trillion won compared to the previous month in January, but credit loans decreased by 3.0054 trillion won.

The seasonal factor such as corporate bonus payments is cited as the cause of the decrease in household loans last month. This means that borrowers repaid credit loans, including overdraft accounts (credit limit loans), with bonuses received from their companies at the end and beginning of the year.

A slowdown in the real estate market is also cited as another cause. As house price increases have stopped, the monthly increase in mortgage loans at the five major banks has stagnated since October last year.

According to the Korea Real Estate Board, the apartment sale prices in Seoul for the third week of January (as of the 20th) remained flat (0.00%) following the previous week. This marks the fourth consecutive week of flat prices since the fifth week of December last year.

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