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Nonbank loans increase for SMEs but decline for conglomerates

All Headlines 08:35 December 12, 2018

SEOUL, Dec. 12 (Yonhap) -- Nonbank loans by conglomerates declined this year, while those by small and medium-sized enterprises (SMEs) rose, central bank data showed Wednesday.

Outstanding loans to large companies totaled 16.72 trillion won (US$14.78 billion) as of end-September, down 787.5 billion won from the end of last year, according to the figures released by the Bank of Korea.

Loans to SMEs, however, increased 26.69 trillion won to 140.59 trillion won during the measured period.

The numbers reflect troubles for both borrowing groups, economic watchers say. The decline for conglomerates is a likely indication that the big firms are withholding investment, unwilling to take risks when the future economy is uncertain.

For SMEs, the increased borrowings probably mean they have maxed out on their loans from banks and still need to borrow more to sustain their businesses, watchers say.

Nonbank loans increase for SMEs but decline for conglomerates - 1

Nonbank lending to conglomerates has been declining since April compared with the same months last year. By contrast, loans to SMEs have been increasing monthly at between 30 and 40 percent. In September, they rose 33 percent.

Loans from commercial banks increased as well for SMEs. As of end-September, the sum stood at 689.27 trillion won, up 35.57 trillion won from the close of last year.

For conglomerates, the number went up 5.47 trillion won to 166.37 trillion won.

The pace of increase for SMEs (6.8 percent) is nearly five times that for conglomerates (1.4 percent), according to the data.
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