Individual overdraft credit loans at South Korea’s major commercial banks have surged to their highest level in over three years, driven by investors channeling funds into stock investments amidst a prevailing bullish market, recent financial data revealed on Sunday.
The cumulative balance of personal overdraft loans, commonly known as “minus accounts,” across the nation’s five largest banks – KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup – reached a significant 40.5 trillion won ($27.64 billion) as of Thursday.
Examining month-end figures, this marks the largest outstanding balance recorded since January 2023, when the total stood at 40.54 trillion won, highlighting a notable resurgence in credit utilization for investment purposes.
In a rapid three-business-day span following the end of April, this figure saw a substantial increase of 715.2 billion won, underscoring strong recent demand for these short-term credit facilities.
Conversely, demand deposits, typically considered ready standby funds, have consistently declined, strongly suggesting a clear shift of capital from traditional bank accounts towards more speculative stock market investments.
As of Thursday, the combined demand deposit balances held at these five prominent lenders totaled 696.06 trillion won, representing a decrease of 501.3 billion won from the close of the previous month. Furthermore, the balance experienced a notable drop of 3.36 trillion won in April alone.
“With the South Korean stock market experiencing a robust rally, an increasing number of investors appear to be leveraging short-term liquidity, including overdrafts, to capitalize on investment opportunities,” stated a banking official. “Beyond stock market dynamics, there also seems to be a consistent demand for credit loans to bridge housing-related funding gaps, partly due to tighter government regulations on broader household loans.”
The South Korean stock market, benchmarked by the Korea Composite Stock Price Index (KOSPI), has distinguished itself as one of the world’s top-performing markets this year. The KOSPI has witnessed an impressive surge of over 70 percent, primarily fueled by substantial gains in key semiconductor stocks. On Friday, the index continued its upward trajectory, reaching a fresh record high of 7,498.
