South Korean banks' household loans surge by largest margin in 11 months

Household debt in South Korea continued its upward trend in June, with the five major banks experiencing the largest monthly increase in loan balances in nearly a year. The total outstanding household loans across KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup banks rose by 4.14 trillion won to reach 774.96 trillion won by the end of the month. This marks the most significant monthly expansion since July of the previous year.

The growth was driven by increases in both housing-backed and unsecured personal loans. Mortgage loan balances climbed by 1.76 trillion won, marking the third consecutive month of expansion. Individual collective loans, often associated with housing, also saw a substantial increase of 860.6 billion won, the largest jump in 21 months. Personal credit loans continued their upward trajectory, adding 2.16 trillion won, a pace similar to the previous month.

This expansion in household borrowing contrasts with a slowdown in corporate lending. Loans to small and medium-sized enterprises (SMEs) decreased by 1.74 trillion won in June, reversing a trend of growth seen over the preceding six months. However, loans to large corporations continued to rise for the sixth consecutive month, increasing by 4.93 trillion won.

Meanwhile, deposits also saw an increase, though the growth rate for savings and fixed deposits slowed compared to May. Time deposit balances grew by 4.68 trillion won, and installment savings by 267.7 billion won. Demand deposits, often considered a buffer for investments in stocks or real estate, increased by 7.64 trillion won.