The growth rate of household loans at the top 5 banks is close to the target of 6%… Concerns about loan interruption

The growth rate of household loans at five major domestic commercial banks is already close to the 6% annual target of the financial authorities. Toss Bank, Korea’s third Internet-only bank, also used up 60% of the household loan limit allowed by the authorities this year within four days of opening. As the end of the year approaches, concerns are growing that banks may tighten their ‘loan faucets’ to curb household lending.

According to the financial industry on the 10th, as of the 7th, the household loan balance of five major banks including KB Kookmin, Shinhan Woori Hana NH Nonghyup Bank stood at 703.4416 trillion won. This is a 5% increase compared to the end of last year. These banks are only 1 percentage point away from the financial authorities’ target for household loan growth this year of 6%. By the end of this year, by the end of this year, the amount that these banks can lend out is about 13.5 trillion won.

The growth rate of household loans by bank was the highest at 7.14% at Nonghyup Bank, which completely stopped new mortgage loans and Jeonse loan since August this year. Hana Bank (5.23%) and Kookmin Bank (5.06%) also exceeded the 5% level. It was followed by Woori Bank (4.24%) and Shinhan Bank (3.16%).

As a result, banks are raising their lending thresholds further to slow the growth of household loans. From the 15th, Hana Bank decided to limit the loan limit to ‘within the range of the increase in the rental deposit (jeonset value)’. If the Jeonse price rises by 200 million won, it means that you can only get a loan within 200 million won. Kookmin Bank has been implementing these measures since the 29th of last month. In addition, Kookmin Bank and Woori Bank recently set a loan limit for each branch, and when the limit runs out, the branch has to stop additional loans. Meanwhile, Toss Bank, which started operations on the 5th, issued a household loan of about 300 billion won by the 8th. Earlier, the financial authorities limited Toss Bank’s total household loan amount to 500 billion won this year. Even though Toss Bank opened its service to only 450,000 out of 1.5 million pre-applicants, it left only 40% of the household loan limit it could handle this year. Toss Bank has already exceeded 25% of its credit loans to low- and medium-credit borrowers. Other Internet-only banks, K-Bank and Kakao Bank, account for only 10% of mid-interest-rate loans to low- and mid-credit users. Toss Bank plans to give out 34.9% of its credit loans to low- and medium-credit borrowers this year, the first year of its launch, in line with the policy stance of the financial authorities, and increase this proportion to 44.0% by the end of 2023. Accordingly, Toss Bank is known to be requesting the financial authorities to ‘exclude medium-interest loans from the total loan limit’.

By Park Hee-chang, staff reporter ramblas@donga.com