Loans to corporations vibrant in second quarter

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Loans to corporations vibrant in second quarter

Financial firms’ corporate loans grew at the fastest pace in three quarters in the second quarter even as the local economy lost steam, the central bank said yesterday.

Corporate lending extended by banks and nonbank institutions stood at 785.5 trillion won ($692.7 billion) as of the end of June, up 9.8 trillion won from three months earlier, according to the Bank of Korea. It rose 4.7 percent from a year earlier.

The second-quarter growth accelerated from a 6.5 trillion won on-quarter expansion in the first quarter.

It also marked the largest quarterly gain since the third quarter of last year.

Given the rate of on-year expansion, the growth rate of the second-quarter lending was within an average of 4 to 6 percent of multiple previous quarters, a BOK official said.

But a pick-up in corporate lending came even as the local economy lost steam in the second quarter, hit by faltering exports and weak domestic demand. Asia’s fourth-largest economy grew 0.4 percent on-quarter in the April-June period.

In the April-June period, local banks’ corporate loans grew 8.6 trillion won on-quarter to 625.8 trillion won, slowing from a 9.9 trillion won gain three months earlier.

Loans borrowed from the nonbanking financial firms was 159.7 trillion won. It expanded 1.2 trillion in the second quarter compared to the first three months of this year.

By industry, lending to manufacturers rose 4.6 trillion won to 265.8 trillion won, smaller than a 9.9 trillion won expansion in the January-March period.

Loans to the services sector gained 5.8 trillion won to 418.1 trillion won, compared with a 3.1 trillion won fall in the preceding quarter, it added.

Lending to builders declined for the third straight quarter in the second quarter, indicating that financial firms were wary of extending credit to the slumping sector due to high credit risks, data showed.

Loans to construction companies fell 400 billion won on-quarter to 49.4 trillion won, larger than a 100 billion decline in the first quarter.

Yonhap

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