Bank household loans reduced by 2.6 trillion won
8.7 trillion ↓ including the financial sector
Corporate loans increased by 104.6 trillion won
200 trillion ‘bundled money’ in bank time deposit
▲ On the 12th, an employee is working at a bank loan counter in Seoul. According to the ‘Financial Market Trends in December 2022’ announced by the Bank of Korea on this day, as of the end of December last year, the balance of household loans at deposit banks was 1058.1 trillion won, down 2.6 trillion won from the previous year. It is the first time in 18 years since 2004 that related statistics began to show that annual household loans decreased.
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Due to high interest rates and a sluggish real estate market, household loans in the bank sector decreased last year for the first time in 18 years. The largest amount of money has ever flowed into term deposits. As the short-term funds market froze, loans to large corporations increased by 37 trillion won last year.
According to the ‘Financial Market Trends in December 2022’ announced by the Bank of Korea on the 12th, as of the end of December last year, the balance of household loans at deposit banks was 1058.1 trillion won, down 2.6 trillion won from the previous year. It is the first time since 2004 when statistics were compiled that the balance of household loans at deposit banks, which have been increasing every year, such as 100.6 trillion won in 2020 and 71.8 trillion won in 2021, has decreased.
Last year, housing mortgage loans (including charter loans) increased by 20 trillion won, but the increase slowed compared to 2020 (68.3 trillion won) and 2021 (56.9 trillion won) as new home purchases decreased due to the real estate recession. In addition, due to the interest rate hike, other loans, mainly credit loans, decreased by KRW 22.8 trillion, leading to a decrease in overall household loans.
Household loans in the entire financial sector, including the secondary financial sector, also turned to a downward trend last year. According to the Financial Services Commission’s “2022 Household Loan Trends,” total household loans in the financial sector decreased by 8.7 trillion won last year, the first decrease since 2015 when statistics began to be compiled. Although housing mortgage loans increased by 27 trillion won, other loans decreased by 35.6 trillion won. By industry, it decreased by 2.7 trillion won in the banking sector and 5.9 trillion won in the secondary financial sector.
Regarding the outlook for household loans this year, Hwang Young-woong, deputy head of the Bank of Korea’s market management team, replied, “As interest rates and regulations are expected to continue, household loans will remain stable. However, we will actively monitor the effect of real estate-related deregulation.”
As the short-term funding market shrank, corporate loans increased by 104.6 trillion won last year compared to the previous year. The increase is more than 15 trillion won more than in 2021 (89.3 trillion won), and it is similar to 2020 (107.4 trillion won), the first year of the outbreak of Corona 19.
In particular, loans to large corporations increased by 37.6 trillion won, a five-fold increase compared to the previous year (7.5 trillion won). Amid difficulties in raising corporate funds, the annual corporate bond issuance amounted to a net redemption of 5.9 trillion won.
Thanks to high interest rates, a lump sum of 200.1 trillion won was poured into bank time deposits last year. This is the highest record in 20 years since the statistics were compiled in 2002. On the other hand, 104.9 trillion won was withdrawn from bank occasional deposits, which have relatively lower interest rates than time deposits.
Reporter Kim So-ra
