As of the end of last month, outstanding corporate loans at the five major banks — KB Kookmin, Shinhan, Hana, Woori and NH NongHyup — totaled 859.7737 trillion won, up 5.4449 trillion won from 854.3288 trillion won a month earlier, the financial sector said Wednesday.
Loans to large companies rose 3.4270 trillion won to 179.0119 trillion won by the end of March. Small- and midsize-business lending increased 2.0179 trillion won to 680.7618 trillion won.
Household lending moved the other way. Outstanding household loans, including mortgages and unsecured credit, fell about 136.4 billion won from the prior month to 765.7290 trillion won. The decline was attributed to the government’s push for a “productive finance” shift that prioritizes corporate lending.
Industry officials largely expect business lending to keep growing after regulators set this year’s household loan growth target at 1.5% and began separate oversight of mortgage lending, raising the bar for new consumer loans. Banks must manage annual lending volumes within the target, and violations bring strong penalties.
Companies, meanwhile, are leaning more on bank loans as the bond market tightens. The Korea Financial Investment Association said the three-year government bond yield, a benchmark for corporate bonds, climbed from 2.953% at the end of last year to 3.370% as of April 1. Banks have responded by offering preferential rates and setting up dedicated teams to attract corporate clients.
KB Kookmin Bank recently decided to expand its productive-finance preferential-rate program to 6 trillion won from 3 trillion won. Combined with its existing 4 trillion won branch-level preferential-rate program, the bank would provide a total of 10 trillion won in support.
Shinhan Financial Group said it launched a “Seongguan Team” to strengthen execution of productive finance through an industry value chain-based sales system. Woori Financial Group recently formalized plans to create a 500 billion won “Woori Regional Development Infrastructure Fund” to expand investment in renewable energy and national strategic infrastructure. Hana Financial Group raised its productive-finance supply target to 17.8 trillion won earlier this year and has also moved to create a 500 billion won infrastructure fund.
A financial industry official said household lending will be difficult to expand as before now that the government has announced tighter rules, while deposits are also harder to attract as their appeal fades. “From a bank’s perspective, there is little choice but to turn to corporate lending, so this trend is likely to continue for the time being,” the official said.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.