Household credit rises sharply, driven by savings banks, credit unions

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Household credit rises sharply, driven by savings banks, credit unions

Published: 03 Nov. 2024, 18:21

SHIN HA-NEE
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A person walks by a sign about a bank's loan programs that was put up on the exterior of a lender in Seoul. [YONHAP]

Korea's household credit increased at a faster rate in October due to rising loans from savings banks and credit unions despite the government's efforts to curb household debts, financial data showed Sunday.

Outstanding household credit extended by all financial institutions, including commercial banks, savings banks and insurance and securities firms, rose by 6 trillion won ($4.35 billion) from a month earlier in October, accelerating from a 5.2 trillion won increase in September.

Loans from Korea's five major commercial banks, including KB Kookmin Bank, Shinhan Bank and Hana Bank, gained by 1.1 trillion won last month.

However, those from thrift institutions, like savings banks, internet banks and credit unions rose by 2 trillion won, marking the largest on month gain in nearly three years since November 2021.

The sharp rise came as retail banks tightened their loan screening processes in response to government efforts to manage the growth of household debt.

"The continued slowdown in the growth of household loans from banks is a positive sign," said a financial authority official. "The secondary financial sector also began strengthening household loan management from September. We anticipate seeing more effects from these measures in the coming months."

Yonhap