South Korean banks’ household lending rise in April

Corporate lending rose to its second-highest monthly figure ever.

South Korean banks’ lending to the household sector rose by KRW1.2t in April, its first rise in 5 months, according to data from the Bank of Korea (BOK).

This was driven by a slower decrease in other loans amidst continued growth in home mortgage lending, the South Korean regulator said.

Home mortgage lending grew at the same pace as in March, by KRW2.1t, thanks to continued demand for funds related to leasehold deposits and group loans, offsetting a slowdown in housing transactions.

Despite continued lending regulations by the government and rising lending rates, other loans declined by KRW0.9t won in April, as the banking sector eased credit loan management. This is a slower pace than the KRW3.1t decline in March.

Meanwhile, bank lending to the corporate sector rose to a historic second-highest, rising by KRW12.1t in April, extending the KRW8.6t rise in March. The figure is second only to April 2020 figures, when corporate loans rose by KRW27.9t when the loan volume was temporarily increased significantly to deal with COVID-19.

BOK attributed the April 2022 rise to seasonal factors including the relending of loans that had been temporarily redeemed at the end of the first quarter, and demand for funds for payments of value-added taxes.

Bank lending to large corporations grew to a larger extent, by KRW4.4t in April from only a KRW900b increase in March, led by the relending of loans temporarily redeemed at the previous quarter-end, and demand for working capital.

Bank lending to SMEs continued to increase, boosted by demand for funds to be used for facilities and funds for payments of value-added taxes, as well as by the ongoing COVID-19 financial support, according to BOK.