Corporate Surplus Funds Hit Record High in Q2, Tripling Previous Quarter’s Peak

Bank of Korea Releases Preliminary Money Flow Data for Q2 2026

Corporate Profits Rise Sharply on Robust Semiconductor Market

Net Fund Operation of Households at 60.7 Trillion Won

Driven by Lower Income and Increased Net Housing Acquis

In the second quarter of this year, the net financial surplus of non-financial corporations in South Korea reached its largest scale since statistical records began. Thanks to the semiconductor industry boom, corporate profits increased significantly, and the record was broken again within just one quarter.

According to the "Preliminary Report on Funds Flow for Q2 2026" released by the Bank of Korea on October 7, the net financial surplus of the domestic sector in the first quarter was KRW 147.8 trillion, up KRW 63.5 trillion from the previous quarter (KRW 84.3 trillion). Net financial surplus is calculated by subtracting the amount of financial liabilities (funds raised) from the amount of financial assets (funds invested) for each economic agent, and it reflects the excess funds available to that agent.

For non-financial corporations, the net financial surplus was KRW 67.1 trillion, the highest since the revision of the statistical framework in 2009, and an increase of KRW 46.3 trillion compared to the previous record of KRW 20.8 trillion in the first quarter.

Kim Yonghyun, head of the Funds Flow Team at the Bank of Korea, explained, “Following the previous quarter, the sharp increase in operating profit from the semiconductor industry boom led to a large surplus of available funds among non-financial corporations this quarter as well.”

Non-financial corporations’ fund investments increased across all categories—deposits at financial institutions, bonds, equity investments, trade credit, and direct investments—rising sharply from KRW 137 trillion in the previous quarter to KRW 267.1 trillion. This is also the highest figure since records began in 2009.

Funds raised also increased significantly, from KRW 116.2 trillion to KRW 200 trillion, mainly through direct financing such as bond issuance and trade credit. This is the highest level since the second quarter of 2021.

The net financial surplus of households (including sole proprietors) and non-profit institutions decreased by KRW 18.5 trillion, from KRW 79.2 trillion in the first quarter to KRW 60.7 trillion. The Bank of Korea analyzed that this was due to a decrease in income and an increase in net housing acquisition, which reduced excess funds.

Typically, households play the role of supplying excess funds to corporations and the government through savings or investments. Therefore, it is common for households to be net investors, while companies and the government are net borrowers. The total amount of funds invested by households in the second quarter, not considering funds raised, was KRW 88.5 trillion, a decrease from the previous quarter's KRW 96.3 trillion.

Household and non-profit institution investments in equity securities and investment funds increased by KRW 101.6 trillion compared to the previous quarter’s KRW 61.4 trillion. However, deposits at financial institutions turned negative, falling from KRW 29.4 trillion to negative KRW 23.3 trillion.

The total funds raised by households in the second quarter amounted to KRW 27.8 trillion, up by KRW 10.7 trillion from the previous quarter (KRW 17.1 trillion). This was largely attributed to an increase in loans received by households from financial institutions, which rose from KRW 16 trillion to KRW 28.8 trillion.

At the end of the second quarter, the household debt-to-nominal GDP ratio stood at 81.1%, a decrease of 4.2 percentage points from 85.3% in the first quarter. Kim explained, “While exports of semiconductors led nominal GDP to increase by 6.2% compared to the previous quarter, household debt increased by only 1.1% due to the government's lending restrictions.”

The net financial surplus of the general government was KRW 11.1 trillion, shifting from a net borrowing position of negative KRW 23.3 trillion in the first quarter. Although funds invested—such as deposits at financial institutions and investments in equity securities and investment funds—decreased by KRW 700 billion from the previous quarter (KRW 46.4 trillion), the amount of funds raised, including government bond issuance and financial institution borrowings, decreased substantially by KRW 35.1 trillion, resulting in KRW 34.6 trillion.

The net borrowing by the overseas sector reached KRW 147.8 trillion, an increase of KRW 63.5 trillion from the previous record of KRW 84.3 trillion in the first quarter, due in part to a larger current account surplus.

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