Corporate loans rise at slowest pace in two years

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Corporate loans rise at slowest pace in two years

Korea’s corporate loans grew at their slowest pace in nearly two years in the fourth quarter of last year due to a slump in the manufacturing sector, according to central bank data released Wednesday.

Outstanding loans extended to local companies by financial institutions totaled 1,121.3 trillion won ($995.5 billion) as of the end of December, up 14.3 trillion won from three months earlier.

It was the smallest on-quarter gain since the second quarter of 2017, when corporate loans increased by the same amount.

By industrial sector, loans to manufacturing dropped 2.2 trillion won on-quarter to 344.8 trillion won as of the end of December.

That was the first drop since the fourth quarter of 2016.

Borrowing by transportation equipment manufacturers, such as shipbuilders, fell by 1.4 trillion won to 14.7 trillion won amid contracting demand at home and abroad. The Korean shipbuilding industry has been undergoing corporate restructuring after struggling with a contraction in global demand.

Total loans in the service sector expanded 17.3 trillion won to 677 trillion won, compared to a record 18 trillion won on-quarter rise in the previous quarter.

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