As Loan Thresholds Rise in the Private Lending Industry, Users Decrease by Over Ten Thousand

Amid worsening business conditions in the loan industry due to high funding interest rates and rising delinquency rates, the number of borrowers using loan services has decreased by more than 10,000 in half a year.

According to the Financial Supervisory Service's "2024 First Half Loan Industry Survey Results" released on the 30th, as of the end of June, the number of loan borrowers was 714,000, down 14,000 from the end of last year. The number of loan users reached 1.12 million at the end of 2021 but decreased to 989,000 at the end of 2022 and was recorded at 728,000 at the end of last year.

This is due to loan providers reducing new loan issuance in response to deteriorating business conditions such as high funding interest rates and rising delinquency rates. As of the end of the first half of this year, the outstanding loan balance was 12.2105 trillion KRW, shrinking by 304.1 billion KRW (2.4%) compared to the end of last year (12.5146 trillion KRW). The outstanding loan balance of large loan providers with assets over 10 billion KRW decreased by 56.9 billion KRW (0.7%) to 8.1317 trillion KRW, and small and medium-sized loan providers also recorded a decrease of 247.2 billion KRW (5.7%) to 4.0788 trillion KRW.

By loan type, among the total outstanding loan balance, unsecured loans and secured loans account for 4.8073 trillion KRW (39.4%) and 7.4032 trillion KRW (60.6%), respectively. Unsecured loans showed a declining trend since the first half of 2022 but slightly increased recently, while secured loans have continued to decrease due to high delinquency rates since last year.

The average loan interest rate for loan users was 13.7% as of the end of the first half of this year, down 0.3 percentage points from 14% at the end of last year. During the same period, the average outstanding loan balance per borrower was 17.11 million KRW, maintaining a similar level to 17.19 million KRW at the end of last year.

The performance of loan companies generally showed an increase. The outstanding balance of purchased receivables by debt collection agencies was 11.21 trillion KRW (principal basis 50.8695 trillion KRW) as of the end of the first half of this year, up 1.2664 trillion KRW (12.7%) from 9.9436 trillion KRW at the end of last year. Loan brokerage firms mediated 95,000 cases in the first half of this year, an increase of 17,000 cases (21.5%) compared to 78,000 cases at the end of last year. However, the delinquency rate (principal and interest overdue by 30 days or more) of large loan providers was 13.1% as of the end of the first half of this year, up 0.5 percentage points from 12.6% at the end of last year.

The Financial Supervisory Service, together with the Financial Services Commission, Ministry of the Interior and Safety, and local governments, announces the results of semiannual surveys on loan providers’ lending and user scale, interest rates, and other factors. This survey was conducted targeting 8,437 registered loan providers as of the end of the first half of this year.