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Banks' household loan growth still higher in Sept. on home-backed lending

12:00 October 13, 2020

SEOUL, Oct. 13 (Yonhap) -- South Korean banks' household loans continued to grow at a fast pace in September largely due to accelerated home-backed lending amid soaring home prices, central bank data showed Tuesday.

Outstanding bank loans to local households came to 957.9 trillion won (US$832.5 billion) as of end-September, up 9.6 trillion won from the previous month, according to the data from the Bank of Korea (BOK).

It slowed from an all-time high of an 11.7 trillion-won gain in August but still marked the second-largest monthly gain since the BOK began to compile related data in 2004.

The BOK said the rise in such lending was mainly attributable to solid demand for home-backed lending.

This photo, taken on Sept. 2, 2020, shows the headquarters of Hana Bank in central Seoul. (Yonhap)

Banks' mortgage loans grew 6.7 trillion won on-month to 702.5 trillion won in September, accelerating from a 6.1 trillion-won increase the previous month and the largest monthly gain in seven months.

South Korea has unveiled a set of measures to cool down the overheated housing market but has failed to put a lid on home prices.

Non-mortgage loans gained 3 trillion won last month, slowing from a 5.7 trillion-won increase in August.

Unsecured loans accounted for the bulk of banks' non-mortgage lending. South Korean households rushed in recent months to borrow money to meet demand for property-related costs and subscribe to initial public offering (IPO) shares.

The financial regulator is seeking to tighten regulations on unsecured loans as excessive demand for credit loans is feared to hurt households' debt-serving capacity and banks' financial soundness.

Meanwhile, banks' corporate loans grew at a slower pace in September from the previous month as large firms repaid debt to improve their quarter-end balance sheets.

Outstanding corporate loans totaled 966.1 trillion won at the end of September, up 5 trillion won from the previous month. It slowed from a 5.9 trillion-won gain in August.

Banks' loans to large firms declined 2.3 trillion won in September, but their lending to small and medium enterprises rose 7.3 trillion won on the back of the government's financial support meant to help them ease the pandemic-caused liquidity crunch.

sooyeon@yna.co.kr
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