In November, 27.7 Trillion Won Poured into Bank Time Deposits... Corporate Loans Surge by 10 Trillion Won

Bank Corporate Loans Increase by 10.5 Trillion Won... Largest Growth as of November

[Image source=Yonhap News]

[Asia Economy Reporter Seo So-jung] With the Bank of Korea's base interest rate hike causing deposit (receiving) rates to rise, 27.7 trillion KRW flowed into savings deposits last month. While bank household loans continued to decline, bank corporate loans increased by more than 10 trillion KRW, marking the largest monthly increase since statistics began in June 2009.

According to the "November Financial Market Trends" released by the Bank of Korea on the 8th, bank household loans (including policy mortgage loans) decreased by 1 trillion KRW compared to the previous month as the increase in mortgage loans slowed and other loans continued to decline. This is the first time household loans have shown a decline in November since statistics began in 2004.

Mortgage loans increased due to rises in group loans and individual mortgage loans, but the volume of jeonse (key money deposit) loans decreased by 1 trillion KRW, reducing the overall increase to 1 trillion KRW. This increase is the smallest ever recorded for November since related statistics began in January 2004. The decline in jeonse loans is also the first since statistics started in 2016. Hwang Young-woong, Deputy Head of the Market General Team at the Bank of Korea's Financial Market Department, explained, "Jeonse loans decreased monthly for the first time, reflecting reduced demand for funds as jeonse transactions slowed. However, we plan to monitor whether jeonse demand will revive with the upcoming new school term."

Other loans decreased by 2 trillion KRW due to rising loan interest rates and ongoing loan regulations. This is the largest decline recorded for November since statistics began in 2004.

Bank corporate loans surged by 10.5 trillion KRW as companies' demand for working capital continued and large corporations increased bank borrowing amid a shrinking corporate bond market. This is the largest increase for November since statistics began in June 2009, surpassing the previous monthly record of 9.1 trillion KRW set last November.

In particular, loans to large corporations increased by 6.5 trillion KRW, marking the largest November increase since statistics began in 2009. The previous monthly record was 2.8 trillion KRW in November 2021.

Loans to small and medium-sized enterprises (SMEs) continued to rise, increasing by 4 trillion KRW, mainly centered on small and medium-sized corporations.

Corporate bonds continued net repayments for the third consecutive month (-3.2 trillion KRW → -1.1 trillion KRW) amid weakened investor sentiment, while commercial paper (CP) and short-term bonds saw net issuance centered on high-quality instruments (3.1 trillion KRW → 3.3 trillion KRW).

Bank deposits increased by 6.5 trillion KRW, mainly in time deposits, influenced by rising interest rates.

Demand deposits (-44.2 trillion KRW → -19.6 trillion KRW) decreased due to outflows mainly from household funds moving into savings deposits.

Conversely, time deposits (56.2 trillion KRW → 27.7 trillion KRW) maintained a strong increase due to banks' efforts to attract funds and inflows from households and corporations following rising deposit rates.

Asset management company deposits rose from 4.4 trillion KRW in October to 8.9 trillion KRW last month. Money Market Funds (MMFs) increased by 6.3 trillion KRW due to short-term fund inflows into banks.

Other funds saw an inflow of 4.1 trillion KRW, with equity funds attracting 2 trillion KRW, while bond funds experienced an outflow of 3 trillion KRW.