BOK "Impact of Banks' Expansion of Corporate Loans"
As banks actively expand corporate lending, industrial loans increased by more than 32 trillion won in the third quarter of this year. Companies also preferred bank loans over corporate bond issuance, leading to an expanded increase in industrial loans for two consecutive quarters.
On the 6th, the Bank of Korea announced through the 'Deposit-taking Institutions' Industrial Loan Data' that the balance of industrial loans by deposit-taking institutions at the end of the third quarter reached 1,875.7 trillion won, an increase of 32.3 trillion won compared to the end of the previous quarter.
The increase in industrial loans by sector had been shrinking for three consecutive quarters from the second quarter of last year (68.4 trillion won) to the third quarter (56.6 trillion won), fourth quarter (28 trillion won), and the first quarter of this year (20.8 trillion won), but rebounded in the second quarter after a year and continued to rise in the third quarter. As a result, the balance of industrial loans in the third quarter also recorded an all-time high.
Seo Jeong-seok, head of the Financial Statistics Team at the Economic Statistics Bureau of the Bank of Korea, said, "This is due to deposit banks strengthening efforts to expand corporate loans and the continued preference of large corporations for bank loans amid rising corporate bond interest rates."
By industry, loans in the manufacturing sector increased from 5.6 trillion won to 10.3 trillion won, with expanded demand for both facility investment and working capital, mainly among export companies.
The service sector saw an increase from 14 trillion won to 16.9 trillion won, centered on finance, insurance, and real estate industries. Finance and insurance (-800 billion won → 700 billion won) turned to an increase due to expanded borrowing from deposit banks by credit card companies and securities firms.
Real estate (6 trillion won → 8 trillion won) saw an expanded increase compared to the previous quarter due to loan execution related to real estate development progress and commercial real estate transactions.
Construction (1.9 trillion won → 2 trillion won) maintained the previous quarter's level of increase amid continued funding demand due to rising construction costs.
Seo explained, "In the construction sector, working capital demand increased due to improved business conditions, mainly centered on ongoing projects in the metropolitan area," adding, "Although commercial real estate transactions are not very active, transaction volumes slightly increased in the second and third quarters."
By purpose, working capital (9.9 trillion won → 14.6 trillion won) saw an expanded increase across manufacturing, service, and construction sectors.
Facility funds (15 trillion won → 17.7 trillion won) increased in manufacturing and service sectors, but turned to a decrease in construction (800 billion won → -200 billion won).
By financial institution type, deposit banks (22.5 trillion won → 30.4 trillion won) expanded their lending scale while maintaining a relaxed lending stance mainly toward large corporations, whereas non-bank deposit-taking institutions (2.4 trillion won → 1.9 trillion won) further reduced their increase compared to the previous quarter due to a tightening lending stance. Seo added, "Non-bank deposit-taking institutions strengthened their lending stance due to concerns over asset soundness and profitability deterioration."
Breaking down deposit bank loans into corporate and non-corporate, both corporate enterprises (20 trillion won → 26.7 trillion won) and non-corporate enterprises (2.5 trillion won → 3.7 trillion won) saw expanded increases. The increase in non-corporate enterprises was mainly due to the real estate sector (700 billion won → 1.2 trillion won) influenced by increased real estate transactions.
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