Industrial Loans Rise by Only 8.6 Trillion Won in Q4 Last Year... Real Estate Sector Alone Sees Increase

Bank of Korea Reports on "Industrial Loans by Depository Institutions for Q4 2025"

Growth Slows for Both Manufacturing and Service Sector Loans, While Decline in Construction Loans Deepens

"Temporary Year-End Repayments by Manufacturers and Improved Service Sector Conditions Were Key Factors"

In the fourth quarter of last year, the increase in industrial loans recorded 8.6 trillion won, the lowest level in a year. This was attributed to both seasonal factors, such as the temporary repayment of year-end loans by manufacturing companies, and improvements in the service sector. However, loans to the real estate sector increased again for the first time in a year, as the scale of bad loan sales and write-offs declined.

According to the "Industrial Loans by Depository Institutions for the Fourth Quarter of 2025" released by the Bank of Korea on March 9, as of the end of December last year, outstanding loans across all industries stood at 2,026.1 trillion won, up by 8.6 trillion won from the end of the previous quarter. This marks a slowdown compared to the 20.2 trillion won increase in the previous quarter, and it is the smallest quarterly increase since the fourth quarter of 2024, when the increase was 3.3 trillion won.

By industry, the outstanding balance of manufacturing loans was 502.7 trillion won, increasing by only 1.2 trillion won. This was mainly due to a decrease in working capital loans, which turned negative by 2.2 trillion won, affected by temporary year-end repayments.

The outstanding balance of service sector loans rose by 9.3 trillion won to 1,293.7 trillion won. This, too, represents a slowdown compared to the previous quarter's increase of 15.7 trillion won.

Within the service sector, loans to the financial and insurance industries grew by only 6.9 trillion won, and loans to wholesale and retail industries increased by just 300 billion won compared to the previous quarter. Lee Hyeyoung, Head of the Financial Statistics Team 1 at the Bank of Korea, explained, "The slower growth in financial and insurance sector loans was due to a base effect from the previous quarter's expansion of bank loans to holding companies and SPCs, as well as repayments of limit loans for year-end financial ratio management. Similarly, the growth in loans to wholesale, retail, and restaurant businesses slowed as business conditions continued to improve, especially for working capital loans."

Loans to the construction sector amounted to 99.9 trillion won, declining by 2.9 trillion won from the previous quarter as a result of decreased construction progress payments, continuing a downward trend.

However, loans to the real estate sector increased by 300 billion won compared to the previous quarter, reversing a year-long decline. This was due to a reduction in the scale of sales and write-offs of delinquent real estate loans by non-bank depository institutions.

By loan purpose, working capital loans increased by 200 billion won in the fourth quarter, while facility loans rose by 6.6 trillion won. The growth in working capital loans slowed compared to the previous quarter, while facility loans remained at a similar level. For facility loans, the manufacturing sector saw a greater increase due to policy loans to the semiconductor industry, whereas the service sector experienced a slowdown, mainly in real estate-related facility loans.

By institution type, loans from deposit banks increased by 9.6 trillion won from the previous quarter, with the pace of growth slowing. Non-bank depository institutions saw a 1 trillion won decrease, with the rate of decline widening.

By company size, loans to large corporations decreased from 7.9 trillion won to 900 billion won, and loans to small and medium-sized enterprises also saw their growth slow from 10.3 trillion won to 6.9 trillion won.

Last year, total loans across all industries increased by 60.7 trillion won, up 3.1%. The annual growth rate has been on a downward trend over the past three years: 13.7% in 2022, 5.1% in 2023, and 3.9% in 2024.

This content was produced with the assistance of AI translation services.