Number of private lenders up 81% in 5 years

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Number of private lenders up 81% in 5 years

The number of private lenders that make profit and the combined amount of their profit jumped significantly over the past five years, a government report showed Wednesday, despite various measures to curb household debt.

In 2018, the number of private lenders that paid corporate tax came to 1,423, up 80.6 percent from 788 in 2013, according to the report from the National Tax Service submitted to the parliamentary finance committee for government audit.

The report said the number has been on a steady increase since breaching the 1,000 mark in 2016. The increase in the number of corporate tax-paying companies may indicate an increase in the sheer number of lenders, but also that more are making profit than before.

The combined amount of corporate taxes paid by private lenders increased to about 220 billion won ($184 million) last year, up 69.6 percent from 129.8 billion won in 2013, while their combined sales grew 34.2 percent from about 2.65 trillion won to 3.55 trillion won over the cited period.

Such an increase comes despite various government steps to limit private lending, including a reduction in the legal maximum interest rate on fresh loans to 24.0 percent from the previous 27.9 percent, along with tougher restrictions on reviews and increased policy lending.

Rep. Kim Doo-kwan of the ruling Democratic Party said the rise in the number of profit-making lenders and their combined profit may be partly due to low interest rates they pay for their own funding.

The country’s key interest rate currently sits at 1.50 percent, close to the record low of 1.25 percent.

As of end-June, overall household debt extended by all local lenders, including banks, came to a record high of 1,556.1 trillion won.

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