South Korean banks’ loans to households, corporates up in April

Corporates borrowed money for dividend payments, the Bank of Korea said.

South Korean banks’ lending to both households and corporates rose in April, which the Bank of Korea (BOK) said was due to demand for funds related to housing sales and corporates needing funds for dividends.

Home mortgage lending grew by KRW2.8t in April, thanks to continued demand for funds related to housing sales, and a slower decrease in extension of loans related to leasehold deposits.

Leasehold deposit loans declined by KRW1.1t to negative KRW1.7t in April. 

Other loans declined by a smaller margin, Bank of Korea noted, falling by KRW500m, affected by the disappearance of seasonal factors and increased demand for funds related to equity investment.

Korean banks’ lending to the corporate sector grew by KRW7.5t in April, faster than the KRW5.9t in March. 

Growth in bank lending to large corporations expanded by KRW3.1t. The BOK noted that lending to large corporations was affected by re-lending of loans temporarily redeemed at the end of Q1, as well as the need to have cash for dividend payments. 

Lending to SMEs also grew by KRW4.4t in April. This was attributed mainly to demand for funds for value-added tax payments, as well as eased lending attitudes of banks, the BOK said.