In line with the government's household loan regulations and its "productive finance" policy, the four major banks (KB Kookmin, Shinhan, Hana, Woori) saw household loans decline and corporations loans increase in the first quarter of this year.
According to the financial sector on the 27th, Shinhan Bank's won-denominated loans as of the end of March this year were up 1.4% from the end of last year, while household loans fell 0.6% and large corporations loans rose 6.1%. Over the same period, loans to small and midsize companies also increased 2%.
KB Kookmin Bank's won-denominated loans as of the end of March were up 0.4% from the end of last year. Household loans fell 0.4%, and corporations loans increased 1.2%. Hana Bank's won-denominated loans also rose 0.9% over the same period, with household loans down 0.3% and corporations loans up 1.8%.
Woori Bank saw household loans rise 0.1% and corporations loans increase 2% in the first quarter. A banking industry official said, "For the time being, major banks are expected to keep a structure of holding down household loans as much as possible while increasing corporations loans."
Corporations loans carry higher risk than household loans, making arrears rate management important. As of the end of the first quarter, the balance of nonperforming loans (NPLs) rose about 12% from a year earlier to exceed 5 trillion won. NPLs refer to bad debts among loans extended by banks in which principal or interest has been in arrears for three months or more, making collection difficult or losses likely.
A banking sector official said, "Except for a few industries such as semiconductors and defense, the overall economy is not in good shape. The conditions for corporations loans also appear likely to worsen, so we are paying considerable attention to soundness risks."