Companies continue to flock to bank loans rather than direct financing amid the bond market squeeze.
According to the Bank of Korea's "March Financial Market Trends" released on the 8th, bank corporate loan balances reached 1,387 trillion won last month, up 7.8 trillion won from the previous month. Although the increase was smaller than February's 9.6 trillion won rise, it marked the third consecutive month of growth.
Small and medium-sized enterprise bank loan balances rose 4.5 trillion won to 1,080.1 trillion won, expanding from the previous month's 4.3 trillion won increase. This was the largest increase in five months since October last year. A BOK official explained, "The expansion was driven by major banks' stance to increase corporate lending for 'productive finance' combined with companies' demand for working capital."
Large corporate bank loans increased by 3.4 trillion won, smaller than the previous month's 5.2 trillion won rise, but still marking the third straight month of growth.
Meanwhile, net redemptions continue in the corporate bond market, which had been a major funding channel for companies. This is because bond yields have surged due to factors including the Iran war, slowing corporate bond issuance. Following net redemptions of 4.1 trillion won in February, net redemptions of 300 billion won were recorded last month. The BOK explained, "As maturing corporate bond volumes expanded, net redemptions continued due to seasonal factors such as shareholder meetings and increased interest rate volatility reducing issuance."
Bank household loan balances stood at 1,172.8 trillion won last month, up 500 billion won from the previous month, turning to growth for the first time in four months. Mortgage loans remained flat from the previous month. The increase narrowed from the previous month's 300 billion won rise due to banks' strengthened lending standards and weakened demand for jeonse (lump-sum deposit lease) funds. However, other loans increased by 500 billion won, centered on credit loans driven by expanded stock investment, pushing up overall household loan balances.
Park Min-chul, Deputy Director of the BOK's Market Operations Team, said, "If stock investment through credit increases, it could accelerate the decline during stock price corrections," adding, "We are monitoring this closely."