The five major commercial banks (KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup) and internet-only banks are raising the bar for household loans, citing exceeding the target level for monthly loan limit goals. In contrast, regional banks still appear to have room within their loan limits.
According to the financial sector on the 25th, KB Kookmin Bank will restrict enrollment in mortgage insurance (MCG, MCI) across both in-person and non-face-to-face channels starting on the 26th. NH Nonghyup Bank has restricted mortgage insurance enrollment since last month. If mortgage insurance enrollment is not possible, the loan limit is reduced. Hana Bank and Woori Bank have cut the credit loan limit to 100 million won. Shinhan Bank is reducing the limit by 20% when extending maturities for overdraft accounts.
Internet-only banks such as K and Kakao and Toss Bank are also cutting limits on credit loans and line-of-credit loans (overdraft accounts) and restricting new loan issuance.
By contrast, major regional banks such as Busan, Gyeongnam, Gwangju, and Jeonbuk are not reducing lending by halting household loan issuance entirely or cutting limits. While Gyeongnam Bank did stop handling credit loans through external platforms, loans remain available through internal platforms such as its own application (app).
At the start of the year, the financial authorities set a household loan growth rate target of 0.5% for the five major commercial banks and around 4% for regional banks. An industry official said, "Considering that regional banks' household loan scale is far smaller than that of the five major commercial banks, the authorities set a more lenient target for them." At a meeting on the 18th, where the Financial Services Commission gathered regional bank officials to review the status of household loan growth, opinions were raised that "taking repayments into account, it is possible to manage without exceeding the target level."
Currently, commercial and internet-only banks have extended more loans than the authorities' targets allow. As of May this year, the five major commercial banks should have reduced the balance of other loans (all general loans excluding mortgage loans) by 125.3 billion won compared with the end of last year, but instead it increased by 1.1583 trillion won.
Regional banks say they can manage the outstanding loan balance through year-end without exceeding the target level, but if users flock from commercial and internet-only banks, limits could be exhausted early. A banking industry official said, "With loan demand still solid and commercial banks keeping the gates shut, demand could spill over to regional banks and the secondary financial sector."