Household lending outpaced corporate loans but not for long.
The loan balances held by South Korean banks hit $779.87b (KRW890t) in Q3 with the gap between household and business lending continuing to narrow on the back of more stringent regulations, reports Yonhap News.
Loan balances of the country’s four major banks, -- KB Kookmin, Shinhan, Woori and KEB Hana, which are denominated in Korean won rose 2.2% QoQ to $776.37b (KRW886t).
Household loan balances accounted for 51.4% of the quarterly amount on the back of a heated mortgage take-up. Outstanding home-backed loans hit $349.22b (KRW392.28t) to mark the largest monthly increase since November 2016, data from The Korea Herald show, as residents turn to bank credit after apartment prices surged.
On the other hand, loans extended to corporations took up the remaining $375.48b (KRW428.5t). The gap between household and corporate lending, however, is expected to narrow further as a result of tighter loan rules.
In fact, household loans are expected to book a slower pace of growth as the government prepares to implement further regulations on the debt service ratio (DSR) and the rent to interest ratio (RTI), giving room for corporate loans to catch up.
Photo from Larry Koester - Flickr, CC BY 2.0
Do you know more about this story? Contact us anonymously through this link.