SEOUL– Household loans extended by banks in South Korea declined for the third straight month in November amid soaring borrowing costs in line with the central bank’s rate hikes to fight inflation, data showed Thursday.
Banks’ outstanding household loans came to 1,057.8 trillion won (US$803.5 billion) as of end-November, down 1 trillion won from a month earlier, according to the data from the Bank of Korea (BOK).
This marked the third straight month of on-month decline after declines of 1.3 trillion won and 700 billion won in September and October, respectively.
During the January-November period, banks’ household loans dwindled 2.8 trillion won from the same period a year earlier, the data showed.
Household loans extended by banks and all other financial institutions also dropped 3.2 trillion won in November from a month earlier, according to separate data from the Financial Services Commission and the Financial Supervisory Service.
The decline is attributed to soaring interest rates in tandem with the BOK’s aggressive rate hikes to tamp down inflation.
The BOK has raised its benchmark rate nine times since August last year by a combined 2.75 percentage points. The rate stands at 3.25 percent.
Banks’ home-backed loans grew 1 trillion won on-month to 795.8 trillion won, though they slowed from the previous month’s 1.3 trillion won on-month rise, the data showed.
Their unsecured and other types of loans to households, meanwhile, shrank 2 trillion won on-month to 260.7 trillion won.
Banks’ corporate lending continued to rise as businesses resorted more to bank loans than the volatile local debt market.
Corporate loans came to 1,179.7 trillion won as of end-November, up 10.5 trillion won from a month earlier, the data showed. It was the 11th straight month increased corporate lending.
Source: Yonhap News Agency