Major South Korean banks reported a notable increase in household loans during the second quarter, primarily driven by borrowers seeking credit for stock market investments and home purchases, according to data released on Sunday.
Outstanding household loan balances at five leading South Korean lenders – KB Kookmin Bank, Shinhan Bank, Hana Bank, Woori Bank, and NH Nonghyup Bank – reached 646.19 trillion won (approximately $421.5 billion) as of Thursday. This marks an increase of 824.1 billion won since the end of last year, based on data compiled by the banks.
This recent surge follows a period of decline. Household loan balances had initially fallen by 5.86 trillion won by the end of March from year-end levels, as borrowers prioritized debt repayment amidst stricter regulations on new lending.However, this downward trend began to decelerate. The decline narrowed to 5.25 trillion won by the end of April and further to 1.57 trillion won by the end of May. A significant reversal occurred in June, with household loan balances resuming an upward growth trajectory.
A significant portion of this increased borrowing can be attributed to unsecured credit loans. Investors actively sought these funds to capitalize on the burgeoning rally observed in the South Korean stock market.
As of Thursday, the total outstanding credit loans amounted to 108.33 trillion won, reflecting a substantial rise of nearly 4 trillion won from 104.3 trillion won recorded at the end of April.
Beyond stock market activity, the appreciating value of homes and an increase in real estate transactions also played a crucial role in fueling the overall demand for household borrowing in South Korea.
