As the government tightens loans to curb real estate demand, loan polarization is worsening. Some large corporations' employees can borrow up to 500 million won interest-free or at low rates from their companies, but most workers without such in-house benefits are struggling as banks raise the bar under total volume controls. Corporate lending is also tilting toward large corporations with strong credit.
According to the financial sector on the 13th, the Financial Services Commission is closely watching the status of in-house loans. It does not see them as a direct regulatory target, but there are concerns that low-interest in-house loans are not subject to the debt service ratio (DSR) and loan-to-value (LTV) rules and could fuel overheating in the dwellings market.
At a household liability review meeting on the 9th, the authorities for the first time asked corporations to voluntarily manage in-house loans. As household loans rose by 830 billion won in May and showed little sign of easing, they broadened the management Daesang.
As the authorities cut total loan volume, the financial sector is increasing lending primarily to large corporations and high-credit borrowers with low arrears risk. At the end of the first half of this year, the outstanding loan balance to large corporations at the five major banks (KB Kookmin, Shinhan, Hana, Woori and NH Nonghyup) was up 11.8% from the end of last year, while loans to small and midsize companies rose only 1.2%. As of the end of May, the delinquency rate was 0.09% for large corporations versus 0.73% for small and midsize companies, a gap of more than eightfold.
As it has become harder to borrow from top-tier banks, small and midsize companies are turning to secondary financial institutions. In the first quarter of this year, corporate loans by nonbank depository institutions (mutual finance institutions, savings banks, etc.) reached 555.7227 trillion won, the highest quarterly level in the past five years. Most of the nonbank depository institutions' corporate loan volume consists of loans to small and midsize companies.
As borrowing from financial institutions has become difficult, some corporations are expanding in-house loans as a benefit. Samsung Electronics(005930) lends up to 500 million won at an annual interest rate of 1.5% to those without a home, among others. It also supports up to 300 million won for jeonse deposits. SK hynix(000660) currently offers up to 100 million won (1.5% annually), but the labor union is demanding an increase to 500 million won.
Dunamu, which operates the virtual asset exchange Upbit, raised its interest-free in-house loan limit from 300 million won to 500 million won. NAVER(035420) offers up to 200 million won, and Bithumb supports interest on loan limits of 200 million won each at a 1.5% rate and pays interest up to 500,000 won per month. As the government tightens lending, in-house loans are becoming one of the best benefits.
A financial industry official said, "When total loan volume is capped, financial companies have no choice but to lend first to those with strong credit and solid collateral."