Consumer loans extended by South Korean lenders surged 6 trillion won ($5 billion) in July as Korean households and self-employed struggled against stagnancy in income and economy.
According to data released by Financial Services Commission, Bank of Korea, and Financial Supervisory Service on Tuesday, household loans extended by local financial institutions increased 6.2 trillion won in July, 600 billion won greater than the gains of a year-ago period and 1.1 trillion won than June.
In the January-July period, however, household loan growth came to 24.2 trillion won, down 15 trillion from the same period a year ago. Cumulated growth during this period continued to slow down this year from 49.6 trillion won in 2017 and 39.2 trillion won last year.
Data showed by household loans extended by the country’s banking sector increased in July from the same month a year ago while those by the non-banking sector including mutual finance, savings banks, insurers, and credit finance corporations fell.
Household lending by banks increased 5.8 trillion won in July, up from 4.8 trillion won growth in the same period last year and 5.4 trillion in the previous month. Growth in last month’s household lending was the biggest since a 6.7 trillion won gain in November, last year.
By loan type, growth in mortgage-backed loans slowed down in July while other loans accelerated.
As of end of July, outstanding balance of local banks’ mortgage-backed lending came to 630.1 trillion won in July, up 3.6 trillion won from a month ago. Growth slowed down from 4 trillion won in April.
On the other hand, other loans including credit-based personal loans came to 223.5 trillion won in July, up 2.2 trillion won during the same period. It was the biggest gain since 4.2 trillion won growth in October, last year.
Data, meanwhile, showed that large companies secured funds mainly by issuing corporate bonds as they reduced on loans.
Outstanding balance of loans extended to large companies came to 154.3 trillion won in July, down 1.1 trillion won from a month ago. The balance for small- and mid-size enterprises stood at 699 trillion won, up 2.6 trillion won during the same period.
Net issuance of corporate bonds, however, reached 3.4 trillion won last month, the largest amount since 3.4 trillion won in July, 2012. Industry insiders noted that large companies piled up on cash to prepare for further slowdown in the economy against growing uncertainties and cut in interest rates.
By Kim Yeon-joo and Lee Eun-joo
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