Corporate Loans Rise for Second Consecutive Month, Approaching 866 Trillion Won

The outstanding balance of corporate loans at South Korea's five major banks reached 866.646 trillion won as of the end of April. This marks an increase of over 5 trillion won for the second consecutive month, following March. Both large corporations and SMEs saw increased demand for loans due to the need for liquidity amid widening domestic and external uncertainties.

As reliance on corporate loans grows amidst a high-interest rate environment, the risk of defaults among lower-credit SMEs and marginal firms is increasing. The average corporate delinquency rate for the five major banks in the first quarter rose to 0.46%, up 0.09 percentage points from 0.37% in the previous quarter. The delinquency rate for large corporations stood at 0.13%, and for SMEs at 0.57%, both higher than the previous quarter.

It has been reported that continued interest rate hikes alongside loan expansions could increase companies' funding burdens and exacerbate defaults. Opinions suggest that corporate defaults could exert downward pressure on the overall economy.