Loans to households decline in September

Finance

Published: 13 Oct. 2022, 18:31 Updated: 13 Oct. 2022, 19:16

Loans to households decline in September

A person passes by a bank in Seoul on Aug. 30. [YONHAP]

Borrowings by households declined in September.

Household loans from banks totaled 1,059.5 trillion ($740 billion), down 1.2 trillion won on month. It was the first decline in a September since the data were first compiled in January 2004.

The statistic is household credit minus credit-card borrowings. It is not as broad as household debt, the internationally comparable figure that also includes loans to small businesses and non-profits and loans from insurers.

Housing-related loans, including mortgages, rose 900 billion won on month, while other types of loans, including unsecured debt, fell 2.1 trillion won in the same period.

Loans to corporations rose 9.4 trillion won to 1,155.5 trillion won.

Customers flocked to banks as deposit rates increased along with the rise in the central bank's base rate.

Deposits grew 36.4 trillion won on month to 2,245.4 trillion won.

Through September, a total of 131.3 trillion won flowed into banks this year.

Shinhan Bank said Thursday it will increase savings and deposit rates by 0.8 percentage points, and Woori Bank will increase its rates by 1 percentage point. KB Kookmin Bank is promising higher rates next week.

Investor deposits at brokers fell 31 percent to 49.3 trillion won last week compared to the beginning of this year, according to Korea Financial Investment Association. Kospi share trading volume fell 45 percent on year in September.

After the base rate was increased by 50 basis points, Bank of Korea Gov. Rhee Chang-yong said on Wednesday that the rate increases will continue until inflation is tamed.

Inflation in Korea hit 5.6 percent in September. The won fell around 20 percent against the dollar this year, which further fueled inflation as import price increase.

On Thursday, Finance Minister Choo Kyung-ho said the central bank’s decision to up the rate by 50 basis points was necessary to cope with inflation and the weak won.

BY JIN MIN-JI [jin.minji@joongang.co.kr]