Last month, household loans in the banking sector surged nearly 5 trillion won. The sharp increase in housing transactions, following the lifting and reassignment of the land transaction permit area, affected the loan performance with a time lag.
According to the 'April Financial Market Trends' report released by the Bank of Korea on the 14th, the balance of household loans (including policy mortgage loans) at deposit banks as of the end of last month was recorded at 1,151 trillion won, an increase of 4.8 trillion won compared to the end of the previous month. The growth was three times that of March (+1.6 trillion won) and the largest since September of last year (+5.6 trillion won).
Housing collateral loans, including jeonse funds, amounted to 913.9 trillion won, an increase of 3.7 trillion won, while other loans, including credit loans, increased by 1 trillion won each to reach 235.3 trillion won.
Park Min-cheol, Vice Administrator of the Market Management Team at the Bank of Korea, noted that "the impact of increased housing transactions in February and March due to the lifting of the land transaction permit system has begun to appear in housing collateral loans from April" and added that "with the bonus inflow effect from the first quarter fading, credit loans have increased significantly, leading to a substantial rise in overall household loans in April."
He further stated, "Considering that housing transactions reflect on household loans with a delay of 2-3 months, it is expected that household loans will be significantly impacted in May," and mentioned that "the possibility of pre-demand arising ahead of the introduction of the three-stage Debt Service Ratio (DSR) is also being examined with the financial authorities."
Last month, corporate loans at banks were recorded at 1,338.7 trillion won, an increase of 14.4 trillion won compared to the previous month. In April, this was the largest increase in five years since April 2020 (+27.9 trillion won). The Bank of Korea explained that this was due to banks resuming corporate lending amid seasonal demands from April's dividend payments and value-added tax payments.
By corporate size, loans to large corporations and small to medium-sized enterprises increased by 6.7 trillion won and 7.6 trillion won, respectively. The increase in loans for large corporations was attributed to dividend payments and refinancing of loans maturing at the end of the quarter, while for small to medium-sized enterprises, it was due to increased funding demand related to value-added tax payments.
Deposits saw an outflow of 25.9 trillion won from deposit banks last month, with the balances amounting to 2,412.5 trillion won. This followed a significant increase of 12.3 trillion won the previous month, indicating a drastic drop within a month. The major factor for this was a 36.8 trillion won decrease in demand deposits due to outflows for value-added tax payments and dividend disbursements.
Asset management companies saw an inflow of 38.5 trillion won, resulting in a larger influx of funds compared to the previous month (-13.1 trillion won). This was primarily due to funds being reintroduced that had been withdrawn for financial ratio management at quarter-end, particularly from money market funds, which saw an increase of 24.1 trillion won. Bond and equity funds also contributed to the increase, growing by 7.4 trillion won and 3.5 trillion won, respectively.