Major Banks' April Credit Loans Surge by 6.8 Trillion Won... "Impact of SKIET IPO Subscription"

[Asia Economy Reporter Lee Seon-ae] The outstanding balance of personal credit loans at commercial banks has surged. It is interpreted as being influenced by the SK IE Technology (SKIET) public offering subscription.

According to the five major domestic commercial banks?KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup?as of the end of last month, the outstanding balance of personal credit loans at these banks was 142.2278 trillion KRW, a sharp increase of 6.8401 trillion KRW compared to the end of the previous month. This marks the largest monthly increase since November last year (an increase of 4.8495 trillion KRW), when personal credit loans showed the biggest monthly growth since commercial banks began compiling the data, breaking the record after five months.

A commercial bank official stated, "The surge in credit loan balances is largely understood to be due to the SKIET public offering subscription." Another bank official explained, "The SKIET subscription fell on the last business day of the month, and the refund of subscription funds occurred in early May, so the loan balance increased significantly at the end of the month."

At the internet-only bank KakaoBank, credit loans (including mid-interest and mid-credit loans) increased by 1.2 trillion KRW during April.

The general public subscription for SKIET shares held on April 28-29 attracted deposits totaling 80.9017 trillion KRW. This amount surpasses last year’s Kakao Games (58.5 trillion KRW), Big Hit (now HYBE, 58.4 trillion KRW), and even this year’s record-high SK Bioscience (63.6 trillion KRW) deposits. As the last 'IPO giant' before the ban on multiple public offering subscriptions, individual investors flocked to participate.

Conversely, funds flowed out of bank time deposits like a receding tide. The outstanding balance of time deposits at the five major banks at the end of last month was 614.7991 trillion KRW, a sharp decrease of 12.8814 trillion KRW compared to the end of the previous month. Time deposit balances also declined rapidly last month following a 2.6667 trillion KRW decrease in March.

The demand deposit balance of the five major banks increased by 4.54 trillion KRW, from 656.484 trillion KRW at the end of March to 661.024 trillion KRW at the end of last month.

Demand deposits include checking accounts, money market deposit accounts (MMDA), and other deposits that depositors can withdraw at any time, thus having a strong characteristic of standby funds. Demand deposits increased by about 29 trillion KRW in February and by 18 trillion KRW in March, but the growth slowed last month.

A bank official said, "We believe customers are waiting to put their funds into various investment targets such as stocks," adding, "These investment targets may also include cryptocurrencies."

KakaoBank’s deposit balance as of the end of April was 24.9 trillion KRW, down 470 billion KRW from the end of March. This is interpreted as a result of funds flowing into public offering subscriptions, stock, and cryptocurrency investments instead of savings and time deposits amid the ongoing low-interest-rate environment.

The outstanding balance of mortgage loans at major banks at the end of last month was 483.8738 trillion KRW, with a monthly increase of only 705.6 billion KRW.

This is the first time in 10 months since last year that the monthly increase in mortgage loans has remained below 1 trillion KRW. It is estimated that the execution of loans decreased as major banks raised interest rates on housing-related loans such as jeonse (key money deposit) loans last month.