Seoul: South Korea's leading banks are expected to significantly reduce household loans this year compared to the previous year due to stricter regulatory measures, recent data revealed.
According to Yonhap News Agency, the top five banks, including KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup, plan to limit their household loan growth to a total of 14 trillion won (US$9.55 billion) this year. This represents a decrease from last year's figure of 14.68 trillion won. The projected loan figures exclude policy loans, such as low-interest loans aimed at supporting the underprivileged.
For this year, Shinhan intends to restrict its household loan growth to 2.3 trillion won, KB Kookmin to 3 trillion won, and Hana to 3.5 trillion won. These measures come after a reported decline in household loans extended by South Korean banks for the first time in nine months in December. This decline is attributed to global uncertainties and increasingly stringent loan regulations.
As of the end of December, banks' outstanding household loans totaled 1,141 trillion won (US$782.1 billion), reflecting a decrease of 400 billion won from the prior month. This marked the first reduction since March when household borrowing fell by 1.7 trillion won. In the interim period, household borrowing rose sharply, driven by escalating housing prices in Seoul and neighboring areas, reaching as high as 9.2 trillion won in August.
In response to these trends, financial authorities have been urging major lenders to apply strict lending criteria to curb the rapid growth in household debt and the surge in housing prices. This has contributed to a consistent decline in the overall loan amounts being issued.