Loan Growth by Industry Shrinks for Third Consecutive Quarter... Manufacturing Sees Increase

As of the first quarter of this year, the increase in loans by industry from deposit-taking institutions has shrunk for the third consecutive quarter. The growth rate recorded the lowest level since the third quarter of 2019.

On the 9th, the Bank of Korea announced through the 'Loans by Industry from Deposit-Taking Institutions' data that the outstanding loans by industry from deposit-taking institutions at the end of the first quarter amounted to 1,818.4 trillion won, an increase of 20.8 trillion won compared to the end of the previous quarter.

This marks the third consecutive quarter of shrinking growth, representing the smallest increase since 20.5 trillion won in the third quarter of 2019.

The Bank of Korea explained, "The growth has shrunk for three consecutive quarters due to improved conditions in direct financing such as corporate bonds and some financial institutions strengthening loan soundness management."

By industry, loans in manufacturing expanded from 3.8 trillion won to 11 trillion won. This is interpreted as an effect of increased working capital demand from export companies and others. Manufacturing saw an expansion in growth for the first time in four quarters, marking the fifth largest increase compared to the previous quarter in history.

The service industry, centered on finance and insurance, and real estate, saw the growth shrink from 15.8 trillion won to 8.4 trillion won. In finance and insurance (-4.8 trillion won), the reduction in loans was due to a decrease in trust account bill purchase loans and an increase in fund procurement through bond issuance.

Additionally, real estate (5.1 trillion won) saw a reduced growth rate due to sluggish business conditions and strengthened risk management. This is the smallest increase since the first quarter of 2017 (5.1 trillion won).

In construction, the growth shrank from 3.3 trillion won to 900 billion won as unsold housing increased and caution regarding real estate project financing (PF) persisted.

By loan purpose, working capital (12.6 trillion won → 11.3 trillion won) saw a significant increase in manufacturing, but the overall growth shrank mainly in electricity and gas, and finance and insurance sectors.

Facility funds (15.4 trillion won → 9.4 trillion won) contracted due to sluggishness in manufacturing and real estate industries. Both working capital and facility funds have shown a shrinking growth trend for three consecutive months.

By financial sector, deposit banks (26 trillion won → 17.4 trillion won) saw a contraction in growth mainly in electricity and gas, and finance and insurance sectors, whereas non-bank deposit-taking institutions (2 trillion won → 3.3 trillion won) had a smaller increase compared to deposit banks due to a strengthened loan attitude.