Five Major Banks Reach 90% of This Year's Corporate Loan Targets in First Half of the Year

Top 5 Banks' Corporate Loans Increase by 38 Trillion in First Half of Year
Household Loans Continue to Decline, Widening Gap with Target

[Asia Economy Reporter Song Hwajeong] As household loans continued to decline in the first half of this year, the five major banks fell significantly short of their loan growth targets. On the other hand, corporate loans maintained an upward trend, already nearing the annual target.

According to the banking sector on the 4th, household loans at the five major commercial banks?KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup?decreased by 9.4008 trillion KRW in the first half of this year. As of the end of last month, the outstanding household loans at these five banks stood at 699.6521 trillion KRW, down 1.4094 trillion KRW from the previous month. This marked the first time in 10 months since August last year that the balance fell below 700 trillion KRW.

Initially, the five major banks aimed for an average household loan growth rate of 4.15% this year, with a combined increase target of 29.4644 trillion KRW. Considering this, approximately 15 trillion KRW in loan growth would have been needed in the first half alone to meet the target. However, with a decrease of over 9 trillion KRW in the first half, it is expected to be difficult to achieve the annual household loan expansion goal this year.

In contrast, corporate loans continued to grow steadily in the first half, reaching over 90% of the annual target. The total corporate loan growth target for the five major banks this year is 41.2 trillion KRW. By bank, the targets are: Kookmin Bank 10.4 trillion KRW (7%), Shinhan Bank 10.2 trillion KRW (7?8%), Hana Bank 5.7 trillion KRW (4?5%), Woori Bank 9.5 trillion KRW (8%), and Nonghyup Bank 5.4 trillion KRW (6.25%). Corporate loans at the five banks increased by 37.9318 trillion KRW in the first half alone. As of the end of last month, the outstanding loans to large corporations at the five major commercial banks exceeded 90 trillion KRW, reaching 91.9245 trillion KRW. Loans to small and medium-sized enterprises also rose by 3.7998 trillion KRW from the previous month, totaling 581.8952 trillion KRW.

Due to rising interest rates, corporate loans are expected to continue their growth, while household loans are projected to remain sluggish. As market interest rates rise, companies are feeling the burden of raising funds through corporate bonds and are turning to bank loans instead. There are forecasts that the outstanding loans to large corporations at the five major banks will approach 100 trillion KRW within the year. Conversely, household loan demand has weakened due to increased burdens from rising interest rates and reduced investment demand amid sluggish real estate and stock markets. Baek Doosan, a researcher at Korea Investment & Securities, stated, "Household other loans, mostly consisting of household credit loans, have declined due to reduced leverage investment demand caused by poor returns in the stock and virtual asset markets, as well as the impact of the second phase of the Debt Service Ratio (DSR) applied since January this year," adding, "The sluggishness in household other loans is expected to continue in the second half of this year." He further noted, "Corporate loan growth will remain solid in the second half due to increased funding demand and expanded incentives for banks to handle such loans."