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(LEAD) Banks' household loans grow for 3rd month in June on home-backed lending

All News 13:55 July 12, 2022

(ATTN: ADDS more details in paras 9-10)

SEOUL, July 12 (Yonhap) -- Household loans extended by banks in South Korea grew for the third straight month in June as home-backed lending picked up due largely to loan demand for home rentals, central bank data showed Tuesday.

Banks' outstanding household loans had come to 1,060.8 trillion won (US$808.3 billion) as of end-June, up 300 billion won from a month earlier, according to the data from the Bank of Korea (BOK).

It marked the third straight month of rises, but the amount grew at a slower pace than in May, when the corresponding figure rose 400 billion won.

The BOK said banks' household loans increased last month as housing-related loan demand expanded despite rising borrowing costs.

Banks' home-backed loans had grown 1.4 trillion won on-month to 789.1 trillion won as of end-June. The June rise accelerated from an 800 billion won on-month increase in May.

Banks' unsecured and other non-mortgage loans, however, fell 1.2 trillion won to 270.4 trillion won last month due mainly to rising lending rates.

This file photo taken June 22, 2022, shows bank officials providing consultations on loan programs with customers at a lender in Seoul. (Yonhap)

Borrowing costs have been on the rise as the BOK has raised the policy rate in a bid to tame inflation and curb household debt.

In May, the BOK hiked the rate by a quarter percentage point to 1.75 percent, the fifth increase since August last year. The central bank will hold its rate-setting meeting Wednesday, with market players looking at the possibility of an unprecedented "big-step" hike of 50 basis points.

Household loans extended by banks and non-banking institutions grew by 700 billion won on-month in June, slowing from a 1.7 trillion won gain the previous month, according to separate data by the Financial Services Commission.

But in the first half, such household loans fell 800 billion won from six months earlier, marking the first half-year decline since 2015, when the financial regulator started compiling related data.

Meanwhile, banks' corporate lending rose for the sixth straight month in June as lenders ran loan programs to help businesses cope with a fund shortage amid the pandemic.

Their corporate loans had stood at 1,125.2 trillion won as of end-June, up 6 trillion won from a month earlier, the BOK data showed. It marked the largest increase for any June since 2009, when the central bank began compiling related data.


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