Last year’s loan increase by industry was 186 trillion… Endured with debt

In the aftermath of Corona 19, money borrowed by companies and self-employed from deposit handling institutions such as banks increased by 186 trillion won last year alone. This is the largest increase in the year since the statistics were collected. However, as the impact of Corona 19 gradually eased, the quarterly loan volume, which peaked in the second quarter of last year, showed a slower increase in the fourth quarter following the third quarter.

According to the’Loans by Industry of Deposit Handling Organizations in the 4th Quarter of 2020′ released by the Bank of Korea on the 3rd, the balance of loans by industry of deposit handling institutions at the end of the fourth quarter of last year was 1393 trillion won, an increase of 27 trillion won compared to the third quarter of last year.

Due to the Corona 19 incident of last year, loans increased 51.4 trillion won and 69 trillion won respectively in the first and second quarters, recording a record high for the second consecutive quarter. In the third quarter, as the aftermath of Corona 19 eased, the increase decreased to 37.8 trillion won, and in the fourth quarter, the increase decreased further.

Compared to the end of the fourth quarter of 2019, before the outbreak of Corona 19, there was an increase of 18.89 trillion won. This is the largest increase ever. The rate of increase compared to the same period last year was 15.4%, the same as in the third quarter of last year, which was the highest in history. An official from the BOK explained that “the cumulative effect of the demand for loan funds from the Corona 19 incident last year.”

Looking at each industry, the increase in the service industry hit by the corona 19 crisis is remarkable. The manufacturing and construction industries returned from an increase of 5.8 trillion won and 1.4 trillion won respectively in the third quarter of last year to a decrease of 2.2 trillion won and 700 billion won in the fourth quarter, while the service industry increased 28 trillion won in the third quarter of last year and 28 trillion won in the fourth quarter. It recorded a similar level of increase compared to the previous quarter with an increase of 700 billion won. Among the service industries, the balances of loans from wholesale and retail, accommodation and restaurant businesses increased by KRW 5.3 trillion and KRW 2.3 trillion, respectively, compared to the previous quarter.

By use, the growth of working capital loans, which had soared due to business difficulties after the Corona 19 incident, was remarkable. The increase in working capital loans from KRW 52 trillion in the second quarter of last year showed a sharp decline in the fourth quarter, followed by an increase of 2.4 trillion KRW in the third quarter and an increase of KRW 1.07 trillion in the fourth quarter. On the other hand, facility financing loans were on the rise. Facility financing loans, which increased by 1.3 trillion won in the third quarter of last year, rose again to 17 trillion won in the fourth quarter. By business sector, deposit bank loans decreased from 20.4 trillion won in the third quarter of last year to 12.600 trillion won in the fourth quarter. Institutions handling non-bank deposits also decreased from 17.3 trillion won to 15 trillion won in the third quarter.

If we look at the loans of deposit banks in detail, loans from non-incorporated companies, which can be viewed as self-employed, increased by KRW 1.4 trillion compared to the third quarter of last year. This is a point that shows that the more the effects of Corona 19 are accumulated, the more the damage is affecting self-employed people. Lending to corporate companies only increased by 2.2 trillion won compared to the previous quarter, and the increase decreased compared to the third quarter (11.300 trillion won).

Reporter Nam Jung-hoon [email protected]

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