Internet Bank Credit Loans Surge, Financial Authorities "Monitoring Overheating Trends"

KakaoBank Personal Loans Increase 17% This Year
K Bank Loans in August Jump 41% Compared to June

[Asia Economy Reporter Kim Hyo-jin] As bank credit loans continue to surge daily, financial authorities have begun to closely monitor loans from internet-only banks. Although their share in the total loan volume remains low, there is a judgment that the overall trend shows signs of overheating.

According to the banking sector on the 10th, KakaoBank's credit loan balance as of the end of last month was approximately 14.7 trillion won, an increase of 400 billion won (2.79%) compared to the end of the previous month. KakaoBank's credit loan balance at the end of January this year was 12.6 trillion won. It has increased by 2.1 trillion won (16.66%) from the beginning of this year to last month. This far exceeds the 13.30% increase rate of credit loans from the five major commercial banks?KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup?during the same period.

K Bank is also rapidly increasing its loans. After being in a state of temporary closure due to funding difficulties, it resumed lending in July and recorded a balance of 1.78 trillion won last month, just one month later. This represents a 41.26% increase compared to June, just before the resumption of lending.

The increase in loans from internet-only banks is analyzed to be related to the 'Donghak Ant Movement,' where individuals borrow money to invest in stocks. This analysis is supported by the fact that KakaoBank's credit loans jumped by 1 trillion won in March, when individual investors began to flood the stock market.

Analysis of Large Influx of Young People Amid Debt Investment and Panic Buying Trends

Despite government regulations, the 'panic buying' by young people anxious about soaring housing prices is also interpreted as having an impact.

A banking sector official explained, "Many people take out mortgage loans from commercial banks and cover the shortfall with credit loans, but it appears that people in their 30s and 40s especially use internet-only banks, which allow loans through non-face-to-face mobile transactions."

A financial authority official said, "The increase in loans from internet-only banks is particularly prominent in the overall banking sector trend," adding, "We do not take it lightly based solely on the absolute volume of loans." Another official from the authorities stated, "We judge that the overheating trend is clear," and mentioned, "We must continuously check compliance with loan regulations related to real estate transactions going forward."

Son Byung-doo, Vice Chairman of the Financial Services Commission: "Will Examine Whether Credit Loan Increase Is Due to Banks' Performance Competition"
Also Mentioned: "Presumed to Be a Complex Effect Including Internet Banks' Efforts to Expand Business"

Son Byung-doo, Vice Chairman of the Financial Services Commission, warned at the Financial Risk Response Team meeting on the 8th, "We will also examine whether the recent increase in credit loans is due to competition among banks for loan performance."

Vice Chairman Son added, "Although it is difficult to accurately identify the purpose of (credit loans), it is presumed that a complex effect has been caused by increased demand for living expenses and business funds, inflows of funds into asset markets such as stocks and real estate, and the active business expansion efforts of internet banks."

Financial Services Commission Chairman Eun Sung-soo also mentioned the recent surge in loans while reflecting on his one-year anniversary on the same day, stating, "We will promote the inducement of market liquidity to productive sectors and the prevention of side effects caused by all-around asset price increases under a long-term perspective."

Meanwhile, the Bank of Korea announced the day before that the household loan balance at the end of last month was 948.2 trillion won, an increase of 11.7 trillion won from the end of the previous month, marking the largest monthly increase ever. Other loans, mostly consisting of credit loans, increased by 5.7 trillion won, which is also the largest monthly increase on record.