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Household debt grows, but rise in corporate loans slows in May

Finance 12:00 June 10, 2020

SEOUL, June 10 (Yonhap) -- South Korea's household debt continued to grow at a steady pace in May, but the rise in corporate loans sharply slowed from a month earlier, possibly reflecting ample liquidity for local firms, central bank data showed Wednesday.

Fresh bank loans extended to local households came to 5 trillion won (US$4.17 billion) in the month, slightly up from 4.9 trillion won the month before, according to the data from the Bank of Korea (BOK).

The rise in home-backed loans slowed to 3.9 trillion won from 4.9 trillion won over the cited period amid a steady decline in the number of home transactions following a series of government measures aimed at curbing real estate speculation.

The undated file photo shows a poster at a bank in Seoul showing interest rates for loans. (Yonhap)

In Seoul, the number of apartment transactions came to 3,000 in April, down from 4,000 the previous month and 8,000 in February, according to the BOK.

"The increase in home-backed loans narrowed on slowing demand for funds related to home purchases and rentals," it said.

Other household loans added 1.2 trillion won in May, marking a turnaround from a negative 100 billion-won growth the previous month.

Fresh corporate loans amounted to 16 trillion won in the month, slowing from a 27.9 trillion-won spike the month before that marked the largest on-month increase in history.

Fresh bank loans extended to large corporations came to 2.7 trillion won, sharply down from 11.2 trillion won in April due to "reduced demand for liquidity and improved conditions for direct financing."

The BOK said debt sold by local businesses increased by a net 3.3 trillion won in May, up from 100 billion won the previous month.

Smaller firms, on the other hand, continued to rely heavily on bank loans, taking out an additional 13.3 trillion won in May alone. The amount still marks a slight drop from a 16.6 trillion-won increase in April.

bdk@yna.co.kr
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