Corporate loans extended by South Korean lenders surged in staggering pace in May, although slowing from record level in April thanks to livelier bond and stock market conditions.
According to data from the Bank of Korea on Wednesday, the outstanding balance in corporate loans at local banks reached 945.1 trillion won ($792.4 billion) as of end of May, up 16 trillion won from the end of April. It is the third-largest balance since the BOK began compiling related data in June, 2009. The largest was in April, this year, when outstanding balance stood at 27.9 trillion won and in March at 18.7 trillion won. It is the biggest jump in balance for the month of May.
The growth pace, however, was slower than in April when economic impact from coronavirus outbreak began to show. Industry insiders noted that overall corporate bond issuance conditions improved particularly for large companies amid government and central bank’s market stabilization measures.
The net amount of corporate bond issuance reached 3.3 trillion won in May, up from 100 billion won in April. Banks’ total amount of loans extended to large companies during the same period decreased from 11.2 trillion won to 2.7 trillion won.
The BOK said that growth in loans extended to large companies dropped as overall conditions to secure funds through corporate bond sale improved. Demand for operational fund and liquidity also slowed.
Loans extended to small- and mid-size companies, meanwhile, dropped from 16.6 trillion won to 13.3 trillion won during the same period amid various support provided by the government and banks. The amount, however, still jumped by the biggest pace for May.
Loans extended to local households in May remained at similar level to April.
The outstanding balance of household loans extended by local lenders reached 920.7 trillion won as of end of May, up 5 trillion won from the end of April.
In April, total loans extended to local households increased 4.9 trillion won and in March 9.6 trillion won – the biggest pace.
Home-backed loans added 3.9 trillion won in May to 680.8 trillion won. In April, home-backed loans gained 4.9 trillion won. Industry insiders noted that demand for funds to purchase and rent houses slowed last month.
According to real estate data provided by Seoul Metropolitan Government, the number of apartment transactions in Seoul fell from 4,000 units in March to 3,000 units in April. The number of jeonse or lump-sum rent transactions also decreased from 9,000 units to 7,000 units during the same period. In Gyeonggi Province area, apartment transactions dropped from 16,000 units in March to 12,000 units in April.
Other loans including credit loans reached 238.9 trillion won in May, up 1.2 trillion won from April, data showed. The BOK said credit loans tend to increase in May as families increase spending to celebrate holidays such as Children’s Day and Parent’s Day
By Lee Eun-joo
[? Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]