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S. Korean banks' credit loans soar in July

All News 09:11 August 04, 2020

SEOUL, Aug. 4 (Yonhap) -- South Korean banks' credit loans to individuals surged for the second consecutive month in July due to soaring housing costs and other factors, industry data showed Tuesday.

Outstanding unsecured loans to individuals by five major lenders -- KB Kookmin, Shinhan, Hana, Woori and NH Nonghyup -- totaled 120.2 trillion won (US$101 billion), up 2.7 trillion won, or 2.3 percent, from June.

The surge in July's individual credit loans follows the largest-ever monthly increase of 2.8 trillion won in June.

Bank credit loans to individuals surged by 2.2 trillion won in March in the thick of the coronavirus crisis before rising by 497.5 billion in April and by 1.07 trillion won in May.

S. Korean banks' credit loans soar in July - 1

July's spike was attributed to surging home prices that prompted people to borrow from banks to buy apartments before prices rise further down the road.

Home-backed loans extended by local banks increased by 1.4 trillion won in July from the previous month.

Apartment prices in South Korea have been skyrocketing despite a series of government measures to keep them in check.

According to the Korea Appraisal Board, apartment prices in Seoul rose 1.12 percent in July from the prior month, the biggest on-month gain in seven months.

Analysts said the recent bullish stock market has sent retail investors taking out bank loans to invest, contributing partly to July's surge in credit loans.

Also responsible was the coronavirus outbreak that forced jobless or furloughed people to borrow money from banks, they added.

The outbreak of COVID-19, which started in South Korea in late January, has battered the country's economy by crimping exports and consumer spending.

Asia's fourth-largest economy shrank 3.3 percent on-quarter in the April-June period, the slowest on-quarter growth since the 6.8 percent contraction in the first quarter of 1998.

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