Bank Household Loan Growth Hits Six-Month Low... Loans to Large Companies Post Biggest Increase in Four Years

Bank of Korea: "September 2026 Financial Market Trends"
Household loans rose KRW 600 billion at end-September...other loans fell KRW 2.3 trillion
Corporate loans rose KRW 10.7 trillion...loans to large companies up KRW 7.5 trillion
Growth driven

Bank household loans rose by 600 billion won in September, the smallest increase in six months. The decline was driven by a sharp 2.3 trillion won drop in other loans, mainly personal credit loans. By contrast, corporate loans grew faster, led by lending to large companies. Loans to large companies posted their biggest increase in more than four years.

According to the “September 2026 Financial Market Trends” report released by the Bank of Korea on October 15, banks’ household loan balance stood at 1,198.9 trillion won at the end of September, up 600 billion won from the end of the previous month. This was the smallest increase since March, when loans rose by 500 billion won.

The increase was limited by a sharp decline in other loans, which include credit loans. The balance of other loans stood at 242.6 trillion won, down 2.3 trillion won from the end of the previous month. This was the largest decline in four years and seven months, since February 2024, when the balance fell by 2.8 trillion won. “The decline widened as several factors coincided: individuals reduced their stock investments, nonperforming loans were sold and written off at the end of the quarter, and seasonal factors such as the inflow of holiday bonuses came into play,” said Lee Seungyeop, deputy director of the Market Operations Team at the Bank of Korea’s Financial Markets Department.

The outstanding balance of mortgage loans stood at 955.5 trillion won, up 2.9 trillion won from the end of the previous month. The increase remained close to 3 trillion won but was smaller than the 4.1 trillion won increase in the previous month. “The decline in jeonse loans continued amid a slowdown in jeonse transactions, and the increase in group loans also slowed as fewer housing units were completed,” Lee said. “Individual mortgage loans rose by 1.6 trillion won, maintaining a solid upward trend.”

“Since the real estate measures announced in August, housing prices in the Seoul metropolitan area have shown declines, particularly in Seoul’s three Gangnam districts and Yongsan District, while other areas have continued to trend upward,” he said. “As it is difficult to assess how housing price trends will affect household loans, we plan to continue monitoring the situation closely.”

Bank lending to businesses increased by 10.7 trillion won, up from 9.7 trillion won in the previous month.

Loans to large companies rose by 7.5 trillion won, a considerable increase from 4.9 trillion won in the previous month. This was the largest increase since October 2022, when loans rose by 9.3 trillion won. “Banks are continuing to expand lending, particularly to financially sound companies,” Lee said. “The increase reflected several factors: companies needed more working capital to repay corporate bonds, whose issuance had become more burdensome as interest rates rose, and facility loans for equipment investment also expanded.”

Loans to small and medium-sized enterprises also rose by 3.2 trillion won, although the increase was smaller than the 4.8 trillion won recorded in the previous month. The Bank of Korea said demand for working capital, including funds for Chuseok, remained strong, but the increase was curbed by the sale and write-off of nonperforming loans at the end of the quarter.

Bank deposits increased by 29.1 trillion won, led by demand deposits. Demand deposits rose by 24.7 trillion won from the end of the previous month as companies deposited funds to manage their financial ratios at the end of the quarter. Time deposits edged up by 2.1 trillion won. “Time deposits, mainly from semiconductor companies, matured in September, so the increase was smaller than the 20.3 trillion won recorded in the previous month,” Lee said. “However, I understand that banks partly offset this by stepping up efforts to attract funds, including by raising some deposit rates.”

Asset management companies’ deposits fell by 11.1 trillion won as money market funds (MMFs) saw substantial outflows at the end of the quarter. MMFs declined by a sharp 25.6 trillion won from the end of the previous month as corporate funds flowed into bank demand deposits and other accounts to manage financial ratios at quarter-end. Over the same period, bond funds grew by 1 trillion won and equity funds by 5.1 trillion won.

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