Household Loans Plummet at Major Banks, Fueling Concerns Over Funding Woes for Genuine Borrowers

Household loans at major commercial banks have notably decreased since the first quarter. This is a result of measures such as the financial authorities' management to curb loan growth, the restriction of household loan growth rates to around 1% for each bank, and the introduction of separate management for mortgage loans. While these measures have been effective in preventing loan growth, concerns are emerging about the difficulties people face in obtaining loans for purchasing homes or securing living expenses.

According to data from the Financial Supervisory Service, KB Kookmin Bank recorded a household loan performance of -178.0% against its annual growth target as of the end of the first quarter. KB Kookmin Bank's target for household loan increase was 909.2 billion won, but it saw a decrease of 1.6143 trillion won by the end of Q1. NH NongHyup Bank, which had a target increase of 870 billion won, saw a reduction of 1.3551 trillion won (-156.0%), and Shinhan Bank saw a decrease of 1.5896 trillion won against its 850 billion won target (-187.0%). Hana Bank's household loans decreased by 1.5402 trillion won in the first quarter, and Woori Bank saw a reduction of 344.7 billion won (-41.7%). These banks showed significant decreases compared to their targets, which is analyzed as a result of banks conservatively managing their total household loan volumes and controlling the pace of lending.

The target for overall household loan growth this year has been lowered to 1.5%, down from 1.7% last year, with the top 5 banks facing a stricter management requirement of around 1%. The financial authorities newly established separate management targets for mortgage loans this year and introduced monthly and quarterly management systems to guide banks in adjusting their lending pace.

Online-only banks also demonstrated a conservative lending approach. KBank saw a decrease of 223.7 billion won (-33.5%) in the first quarter against its annual target of 667.3 billion won, and Toss Bank executed only 37 billion won (7.0%) of its 550.2 billion won target in the first quarter.

With the sustained conservative lending stance from the financial sector, it has been pointed out that loan opportunities for genuine borrowers, including those with low-to-medium credit scores, may be reduced. Lee In-young, a member of the Democratic Party of Korea, noted that if banks focus solely on meeting total volume targets, the burden could be shifted to individuals with low-to-medium credit scores and those borrowing for livelihood expenses.