New Loans for Self-Employed in Daegu-Gyeongbuk Up 31% Since COVID-19

[Asia Economy Reporter Kim Eun-byeol] Since the COVID-19 pandemic, the number of self-employed individuals in the Daegu-Gyeongbuk region who newly took out loans has increased by as much as 31%.

According to the Bank of Korea Daegu-Gyeongbuk Headquarters' report titled "Changes in Self-Employed Loans and Potential Risks in the Daegu-Gyeongbuk Region after COVID-19" on the 5th, the loan amount for self-employed individuals in Daegu-Gyeongbuk reached 74 trillion won, a 16.8% increase from the end of the previous year (63.4 trillion won), which was similar to the regional average growth rate (16.7%). However, as of the end of 2020, the number of self-employed borrowers in the Daegu-Gyeongbuk region was 242,700, a 30.9% increase from the previous year-end, significantly exceeding the regional average of 24.1%.

By income level, loan amounts for the middle-income (32.9%) and low-income (22.9%) groups increased significantly compared to the high-income group's loan increase (12.8%).

By credit rating, loans to self-employed individuals with high credit ratings increased by 20.7%, from 45.2 trillion won in 2019 to 54.5 trillion won last year. For the middle credit rating group, loans rose by 13.6%, from 15.3 trillion won to 17.4 trillion won, but loans to self-employed individuals with low credit ratings actually decreased from 2.9 trillion won to 2.1 trillion won.

The Bank of Korea Daegu-Gyeongbuk Headquarters analyzed that this was due to the high-credit group, which had not previously taken out loans, actively borrowing amid the spread of COVID-19, while uncertainty increased and funding supply to low-credit borrowers was relatively constrained.

By age group, loan amounts for the elderly aged 60 and above increased by 46.8%, and those aged 30 and below also rose by 25.5%.

The Bank of Korea Daegu-Gyeongbuk Headquarters warned, "As self-employed individuals' incomes have decreased due to social distancing measures and loans to self-employed individuals have increased sharply due to financial support, concerns about the debt repayment ability of self-employed individuals are growing from a mid- to long-term perspective."