According to the financial sector on June 28, the Financial Services Commission will convene some specialized financial institutions this week to review the current status and management strategies for household loan increases. This follows recent meetings with internet banks, regional banks, and insurance companies, now including credit card companies in the oversight scope.
The authorities are closely monitoring the credit card sector due to a persistent rise in card loans. As of the end of last month, the total outstanding balance of card loans from nine major credit card companies (Lotte, BC, Samsung, Shinhan, Woori, Hana, Hyundai, KB Kookmin, and NH Nonghyup) reached a record 43.2534 trillion won.
In response to the total volume management policy, credit card companies have already intensified their internal monitoring and reduced the visibility of certain products on loan comparison platforms. Although marketing efforts have been scaled back, reports indicate that card loan balances have not shown a significant decline. Following the Financial Services Commission's review, there is speculation that credit card companies may adjust loan limits or tighten lending criteria.
The increase in household loans has continued throughout the first half of this year. The total household loans across the financial sector increased by 1.4 trillion won in January, 2.9 trillion won in February, 3.5 trillion won in March, 3.5 trillion won in April, and 9.3 trillion won in May. This upward trend has persisted into June, solidifying a six-month streak of increases.
The surge in loans has been fueled by strong performances in the stock and real estate markets. As of June 25, the increase in household loans for the five largest banks was 3.7 trillion won, with specialized financial institutions contributing 700 billion won and the insurance sector adding 600 billion won. The increase in personal credit loans from the five major banks was approximately 2.212 trillion won, the highest in over five years since April 2021, while mortgage loans rose by about 1.1 trillion won.
As banks have tightened their lending criteria, some borrowers are turning to card loans. Analysts suggest that as banks reduce credit limits for high-income borrowers, more individuals are seeking the relatively accessible option of card loans.
The insurance sector is also under scrutiny. On June 25, the Financial Services Commission met with insurance companies to review their household loan management strategies. Following this, insurance companies are considering reducing limits on mortgage and credit loans, restricting new loans, and limiting non-face-to-face lending.
Insurance contract loans are also on the rise. The outstanding balance of insurance contract loans from five major non-life insurers and three life insurers increased by about 500 billion won, from 46.3203 trillion won in April to 46.8430 trillion won last month. However, since these loans are often secured by surrender values, the industry faces significant pressure to further reduce limits.
Regulators are also focusing on mutual finance. The Financial Services Commission is expected to meet with some mutual finance companies that have shown an increase in group loans to assess the status of household loans.
A financial sector official stated, "When one avenue for loans is restricted, demand will seek alternative channels. If card loans and insurance contract loans are also tightened, vulnerable borrowers may be pushed into more expensive markets, so a careful approach is necessary."
* This article has been translated by AI.
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