S. Korea’s household loans rose by nearly 75 trillion won (US$67 billion) last year. Its growth rate slowed down compared to a year earlier but mortgage loans from banks increased at a rapid pace. Bank lending to large corporations showed an increase for the first time in four years with restructuring in the shipbuilding industry entering the final stage.
Household lending in the financial industry grew by 6.5 trillion won (US$5.81 billion) last month, according to a report titled “2018 December Financial Market Trend” released by the Bank of Korea (BOK) on Jan. 10. The figure represented a 500 billion won (US$447 million) increase from a year ago (December 2017) and a 1.50 trillion won (US$1.34 billion) drop from the previous month (November 2018).
Household loans grew 75.1 trillion won (US$67.11 billion) in 2018, down 15.40 trillion won (US$13.76 billion) compared to 2017. This was largely due to the decrease in household loans from non-bank financial institutions, such as insurance, mutual finance, savings bank, specialized credit finance and Saemaul Bank. However, household lending from banks grew 60.80 trillion won (US$54.33 billion) in 2018, larger than the 58.90 trillion won (US$52.64 billion) in 2017, owing to rising home prices and a low interest rate trend.
Mortgage loans rose by 4.90 trillion won (US$4.38 billion) last month alone, showing the highest growth for the first time in two years and one month after 6.1 trillion won (US$5.45 billion) in November 2016. This is attributed to the increase in loans to people who started moving into the newly built apartments they purchased in recent years.
Bank loans to large businesses increased by 5 trillion won (US$4.45 billion) last year for the first time since 2014. An official from the BOK said, “Loans to large companies had a negative growth for a while but the figure increased last year. Most of them were loans for operation expenses.”
Individual business loans which recently showed a monthly growth of more than 2 trillion won, grew by 25 trillion won (US$22.34 billion) on a yearly basis. The growth slightly dropped from 27.80 trillion won (US$24.84 billion) a year earlier.
The amount of increase in total business loans came to 42.70 trillion won (US$38.16 billion), which was the highest figure in three years after 48.30 trillion won (US$43.16 billion) in 2015.