Bank Increases Credit Loan to 48.9%

Domestic banks tend to increase loan on credit without security and the volume of the loan becomes about 50% of total loan.

At 9th of August, according to the Financial Supervisory Service, as of the late June, credit loan accounted 117 trillion and 823.3 billion won (48.9%) out of total loan 241 trillion won offered by 20 domestic banks.

Credit loan tends to increase as following; 46.9% in the end of the last year, 47.7% in the end of March of this year so on.

Lim Ju-jae, Senior Office for Credit Supervisory analyzed “banks withdrew loan temporarily to meet net capital ratio of BIS at the end of June. However they has increased credit loan by lowering the standard of the amount of collateral required, and abolishing the principle that loan requires security.

Export-import Bank of Korea records the highest ratio of credit loan by 85% among domestic financial institutions, the second one is Hana Bank (65.1%), the next one is Fishery Cooperative (64.1%), etc. Korea Development Bank increased the loan by 19.5% from 43.4% at the end of June of the last year to 62.9% at the end of June this year.

On the other side, in case of Kookmin Bank, the loan decreased to 40.5% by 2.2% compared to the end of June of the last year. Woori Bank shows the same tendency as well. So they are indicated as not overcoming the habitual loan method. The purpose to emphasis on the credit loan is to establish precious system to evaluate health business and support them.

Dong-Won Kim daviskim@donga.com