Household Loans up by 5 Tril. Won

Bank loans to household increased explosively for the first quarter this year. On the other side, loans to corporate increased only slightly, implying that banks are getting more and more unwilling to lend loans to corporate due to the risk to be dishonored.

On 7th, according to the report of commercial Banks (excluding special banks) on total sum of loans, loans to household reached 95 trillion 61 billion won, increased by 5.45percent over 90 trillion 148 billion won at the end of last year. But loans to corporate recorded merely 132 trillion 47 billion won, increased by 0.68percent over 131 trillion 159 billion won at the end of last year. That is, loans to household increased about 4 trillion 913 billion won, but loans to corporate increased merely 888 billion won, 18% of increase of household loans.

This record shows the deepening tendency that banks are unwilling to lend loans to corporate while trying to expand loans to household. Loans to household of last year reached 90 trillion 148 billion won, increased 39.82percent over the end of 1999, and loans to corporate, 131 trillion 159 billion won, increased by 16.35percent over the end of 1999.

An official of a commercial bank said that while large companies’ demands on loans are not big due to an economic downturn, loans to medium and small-sized enterprises are improving but recorded simply small increase. Banks have focused on loans household that is relatively safe and is highly profitable, worrying insolvent enterprises.

Lee Heon-Jin mungchii@donga.com