Chuseok, mortgage demand drive up Korean banks’ lending in September

Home mortgage demand grew by $4.49b (KRW6.1t) in August.

Loans extended by South Korea’s banks to households and companies grew in September amidst sustained demand for mortgages and a rise in corporate fund demand for the Chuseok holidays.

Household loans grew by $3.6b (KRW4.9t) in September, according to data released by the Bank of Korea (BOK). This is slightly lower than the $5b (KRW6.9t) growth reported for August.

Home mortgage demand grew by $4.49b (KRW6.1t) in August, slightly lower than the month prior, due to a decreased number of business days and tightening lending conditions of financial institutions, the BOK said.

Other loans contracted by $957m (KRW1.3t), which BOK blamed on seasonal factors such as inflows of bonus payments for the Chuseok holidays, and write-offs and sales of non-performing loans.

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Chuseok demand
Bank lending to the corporate sector in September, meanwhile, rose at a higher rate than in August.

Banks extended $8.3b (KRW11.3t) to corporates during the month, a jump from the KRW8.2t in loans granted to companies in August.

Bank lending to large corporations grew by $6b (KRW4.9t) in September, thanks to sustained corporate demand for funds. BOK particularly noted that loans extended to the manufacturing sector grew the most.

Lending to SMEs, meanwhile, rose by $4.7b (KRW6.4t) during the same month. 

The central bank attributed this to banks’ efforts to expand their lending, corporate fund demand for the Chuseok holiday,s and deferrals on loan repayments owing to the last day of the month falling on a holiday.

(US$1 = KRW1,356.67)