Outstanding loans to industries at deposit-taking institutions reached 2,065.3 trillion won ($1.55 trillion) at the end of June, up 30.6 trillion won from three months earlier, the Bank of Korea said Monday.
The increase was slightly smaller than the 30.8 trillion won gain in the first quarter.
Working-capital loans, which finance day-to-day business operations, increased by 23.8 trillion won during the quarter, accelerating from a 21.4 trillion won rise in the previous three months.
Facility loans to fund investment in plants and equipment rose 6.9 trillion won, slowing from a gain of 9.4 trillion won in the first quarter. Working-capital lending grew 6.1 percent from a year earlier, compared with 3.1 percent for facility financing.
The BOK said demand for working capital included financing used to repay corporate bonds.
The divergence was particularly visible in manufacturing, where working-capital loans increased by 7.0 trillion won, up from 6.6 trillion won in the first quarter.
Manufacturing facility loans rose just 1.4 trillion won, sharply slowing from a 4.4 trillion won increase, as chemical and medical products as well as electronics-related industries recorded smaller increases.
Overall manufacturing loans increased by 8.4 trillion won, down from 11.0 trillion won in the first quarter.
Loans to manufacturers of electronics and related computer, video, audio and communications equipment increased by 1.0 trillion won. That compared with 1.8 trillion won three months earlier. Automobile and trailer manufacturers, however, saw borrowing rise by 1.3 trillion won from 800 billion won.
Service-sector borrowing moved in the opposite direction, increasing by 19.9 trillion won after a 19.1 trillion won rise in the first quarter.
Real estate and financial companies accounted for much of the increase, with lending to each sector rising by 6.2 trillion won.
Real estate borrowing accelerated from a 2.5 trillion won increase in the first quarter as guarantees for real estate project-financing loans expanded, according to the BOK.
Loans to financial and insurance businesses also increased by 6.2 trillion won, up from 4.8 trillion won, as higher derivatives-market margin requirements boosted funding demand among securities firms.
The composition of lending also differed sharply by institution and company size.
Loans extended by commercial banks increased by 29.3 trillion won, accelerating from 25.0 trillion won, while lending by non-bank deposit-taking institutions rose only 1.3 trillion won after a 5.8 trillion won increase.
Large-company bank loans increased by 16.5 trillion won, compared with 12.7 trillion won in the first quarter.
Loans to small and medium-sized companies rose by 11.4 trillion won, while lending to individual business owners increased by 1.1 trillion won.
The figures showed that corporate borrowing remained strong in the second quarter, but the additional credit was concentrated more heavily in short-term operating needs and service industries than in new manufacturing facilities.
AJP Takeaways
Bank of Korea data showed industry loans at deposit-taking institutions rose by 30.6 trillion won in the second quarter to 2,065.3 trillion won.
South Korea's manufacturers increased working-capital borrowing while facility-loan growth slowed sharply, particularly in chemicals and electronics-related industries.
Korean service industries led the increase in borrowing, with real estate and financial businesses each adding 6.2 trillion won in loans.
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