Household Loan Limit Already Exhausted with 7.29 Trillion Won in Lending
The aggregate household loan growth at the five major commercial banks (KB Kookmin, Shinhan, Hana, Woori, and NH NongHyup) reached 7.2918 trillion won this year, exceeding the annual target of 7.11 trillion won, it was tallied on the 22nd. Household loans are money lent by banks to individuals for living expenses or home purchases, and the early exhaustion of the target limit means loan demand was larger than expected.
The five banks raised this year's total household loan target from roughly 4.33 trillion won to 7.11 trillion won in consultation with financial authorities late last month. It was a follow-up measure after the authorities expanded the total household debt growth target from 1.5 percent to around 3 percent under the "August 13 real estate measures." However, less than a month after the target was raised, the newly granted lending capacity of about 2.78 trillion won was fully depleted.
According to the "Status of Won-Denominated Loan Delinquency Rates at Domestic Banks as of End-July 2026 (Provisional)" released by the Financial Supervisory Service the same day, the delinquency rate on won-denominated loans at domestic banks (based on principal and interest overdue for more than one month) came to 0.63 percent, up 0.07 percentage points from 0.56 percent the previous month—the highest level in ten years since 0.78 percent in 2016.
By sector, the corporate loan delinquency rate rose 0.10 percentage points from the previous month to 0.78 percent. The delinquency rate on large corporate loans rose to 0.36 percent, up 0.14 percentage points from 0.22 percent the previous month and 0.22 percentage points from a year earlier, the highest level in five years since 0.37 percent in July 2021. The FSS explained that the increase in the delinquency rate was affected by a reduced scale of delinquent loan disposals, such as outright sales, compared to the previous month, as well as new delinquencies resulting from corporate rehabilitation and workout proceedings involving affiliates of the Jungwon Group.
