SEOUL– Household loans extended by banks in South Korea expanded for the second straight month in May but at a slower pace than a month earlier amid rising borrowing costs, central bank data showed Friday.
Banks’ outstanding household loans came to 1,060.6 trillion won (US$838.41 billion) as of end-May, up 400 billion won from a month earlier, according to the data from the Bank of Korea (BOK).
This marked the second straight month of rises but the amount grew at a slower pace than a month earlier when the corresponding figure increased 1.2 trillion won.
During the January-May period, their outstanding household loans contracted 100 billion won from a year earlier.
Household loans extended by financial firms, including non-banking institutions, expanded 1.8 trillion won on-month in May, according to separate data from the Financial Services Commission and Financial Supervisory Service.
Borrowing costs have been rising as the central bank has raised its policy rate at a fast clip to tamp down inflation pressure. Last month, the BOK hiked the rate by a quarter percentage point, the fifth increase since August last year.
Banks’ mortgage loans grew 800 billion won on-month to 787.6 trillion won as of end-May. The on-month increase, however, was smaller than a 2 trillion won rise a month earlier.
Their loans, mostly unsecured lending, shrank 500 billion won to 271.6 trillion won at the end of May, the data showed.
Banks’ corporate lending, meanwhile, grew for the fifth straight month in May as businesses tried to secure operation funds amid the pandemic.
Their corporate loans stood at 1,119.2 trillion won as of end-May, up 13.1 trillion won from a month earlier, the data showed. The growth compared with the previous month’s 12.1 trillion won rise.
Source: Yonhap News Agency