56.2 Trillion Won Poured into Savings Deposits... Corporate Loans Surge by 14 Trillion Won

[Asia Economy Reporter Seo So-jeong] Due to the Bank of Korea's consecutive base rate hikes, 56.2 trillion won flowed into savings deposits, marking the largest increase ever. Last month, while household loans at banks continued to decline, corporate loans surged by nearly 14 trillion won, recording the largest increase since statistics began in 2009.

According to the 'Financial Market Trends in October' released by the Bank of Korea on the 9th, last month, bank household loans (including policy mortgage loans) decreased by 600 billion won compared to the previous month, as the increase in mortgage loans slightly expanded and the decline in other loans somewhat narrowed. This is the first time household loans have shown a decline in October since statistics began in 2004.

Mortgage loans slightly expanded by 1.3 trillion won as jeonse deposit loans decreased somewhat, but group loans and others increased.

Other loans decreased by 1.9 trillion won due to rising loan interest rates and continued loan regulations, marking the first decline in October since related statistics began in 2004.

Bank corporate loans surged by 13.7 trillion won as demand for working capital continued and large corporations increased their use of bank loans amid a contraction in the corporate bond market. This is the largest increase since related statistics began in 2009 for the month of October. The previous largest increase was 10.3 trillion won recorded in October last year.

In particular, loans to large corporations increased by 9.3 trillion won, marking the largest increase since related statistics began in 2009 for the month of October. The previous largest increase was 3.1 trillion won in October 2015.

Loans to small and medium-sized enterprises increased by 4.4 trillion won due to continued demand for working capital and seasonal factors such as value-added tax payments.

Corporate bonds continued net repayments (-600 billion won → -3.2 trillion won) due to sluggish issuance amid weakened investor sentiment, while commercial paper (CP) and short-term bonds (-400 billion won → 3.1 trillion won) shifted to net issuance centered on high-quality instruments.

Hwang Young-woong, Deputy Head of the Market General Team at the Bank of Korea's Financial Market Department, explained, "Bank corporate loans increased at the largest rate since related statistics began in 2009 for the month of October," adding, "The increase in large corporate loans is also the largest since related statistics began for October."

Bank deposits increased by 6.8 trillion won, mainly in time deposits, due to rising interest rates.

Demand deposits (-3.3 trillion won → -44.2 trillion won) sharply declined as funds moved to savings deposits and corporate and household funds were withdrawn due to value-added tax payments.

On the other hand, time deposits (32.5 trillion won → 56.2 trillion won) continued a strong increase due to inflows from households and corporations following rising deposit interest rates.

Asset management company deposits turned positive from -12.4 trillion won in September to 4.4 trillion won last month. Money Market Funds (MMFs) increased by 6.4 trillion won due to the resolution of quarter-end seasonal factors and inflows of surplus government funds.

Other funds saw an inflow of 300 billion won, with bond funds experiencing an outflow of 4.7 trillion won and equity funds seeing an inflow of 3.1 trillion won.