Q2 Industrial Loans Rise by 30.6 Trillion Won: "Productive Finance Policies Drive Growth, Moderate Uptrend Expected"

Bank of Korea: "Q2 Industrial Loans by Depository Institutions"

Outstanding Balance at 2,065.3 Trillion Won, Up 30.6 Trillion Won from Previous Quarter

Productive Finance Expansion Strategy vs. Bank Risk Management

Moderate Growth Expected for Industrial Loans Ahead

In the second quarter of this year, the increase in industrial loans surpassed 30 trillion won for the second consecutive quarter. While there were differences across industries, the overall trend was similar to that of the first quarter. Compared to the same period last year, the growth rate has been gradually rising. Analysts attribute this trend to the government’s productive finance policies as well as banks’ strategies to expand corporate lending.

An employee is organizing 50,000 won bills at the headquarters of Hana Bank in Jung-gu, Seoul.

According to the “Industrial Loans by Depository Institutions for Q2 2026,” released by the Bank of Korea on September 7, the outstanding balance of industrial loans by depository institutions at the end of the second quarter reached 2,065.3 trillion won, an increase of 30.6 trillion won from the end of the previous quarter. Although this was slightly less than the increase seen in the first quarter (30.8 trillion won), the growth remained robust at over 30 trillion won. Compared to the same quarter last year, the year-over-year growth rate accelerated from 3.0% in Q3 last year, 3.3% in Q4, to 4.0% in Q1 and 4.7% in Q2 this year.

By industry, loan growth in the manufacturing sector slowed, from 11 trillion won in the first quarter to 8.4 trillion won in the second quarter, whereas the service sector grew from 19.1 trillion won to 19.9 trillion won. Kim Sungjun, head of the Financial Statistics Team 1 at the Bank of Korea’s Economic Statistics Department, explained, “In manufacturing, the increase slowed mainly for facility funding due to efforts to manage financial ratios at mid-year and some companies opting for early repayment.” Facility loans to the manufacturing sector rose by 4.4 trillion won in Q1 this year but only by 1.4 trillion won in Q2. As for the construction industry, while working capital loans increased, facility loans declined, resulting in an overall similar level to the previous quarter.

The service industry expanded its increase from 19.1 trillion won in Q1 to 19.9 trillion won in Q2, led largely by real estate and financial & insurance industries. Kim pointed out, “The real estate sector saw its increase expand from 2.5 trillion won in the previous quarter to 6.2 trillion won in Q2, influenced by the expansion of real estate project financing (PF) loan guarantees.” He added, “Growth in the financial & insurance sector (from 4.8 trillion won to 6.2 trillion won) was driven by increased margins for derivatives market deposits, resulting in greater lending, particularly among securities firms.”

By purpose, the growth in working capital loans increased from 21.4 trillion won in the previous quarter to 23.8 trillion won in the second quarter. This was attributed to demand for funds related to corporate bond redemptions, among other factors. The increase in manufacturing (from 6.6 trillion won to 7 trillion won) grew larger, and the service sector sustained its strong growth (from 14.2 trillion won to 14 trillion won).

The increase in facility loans fell from 9.4 trillion won in the previous quarter to 6.9 trillion won in the second quarter. In the service sector (from 4.9 trillion won to 5.9 trillion won), the increase was led by real estate and related industries. Conversely, in manufacturing, the increase narrowed, particularly in chemicals, medical products, and electronic components, computers, video, audio, and communication equipment.

By institution, deposit banks expanded their increase in Q2 by 29.3 trillion won, whereas non-bank depository institutions saw their increase shrink from 5.8 trillion won to 1.3 trillion won.

Based on company size, deposit banks saw loan growth to both large corporations and small and medium-sized enterprises (excluding sole proprietors) expand to 16.5 trillion won and 10.3 trillion won, respectively, while growth for sole proprietors slowed (from 1.5 trillion won to 1.1 trillion won).

Looking ahead, industrial loan growth is expected to continue on a moderate upward trajectory. Kim noted, “Although the increase has accelerated compared to the same period last year, it still falls short of the long-term average (7.0%).” He continued, “The ongoing expansion of productive finance strategies will be a factor fueling further increases, but risk management by banks and the slowdown in regional real estate markets will act as constraints, so it remains to be seen how the trend will actually play out.”

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