Industrial loans increased by more than 30 trillion won in the second quarter this year, continuing a growth trend similar to that of the first quarter. While the increase in manufacturing loans slowed, service sector loans rose at their largest rate in 14 quarters, driven by expanded guarantees for real estate project financing (PF) and heightened funding demand from securities firms.
According to the Bank of Korea's "2026 Second Quarter Deposit-Taking Institutional Investor Industry-Specific Loan Data" released on the 7th, industrial loan balances stood at 2,065 trillion 300 billion won as of the end of the second quarter, an increase of 30.6 trillion won from the previous quarter. The growth rate was slightly lower than in the first quarter (30.8 trillion won).
The year-on-year growth rate rose from 3.0% in the third quarter last year to 3.3% in the fourth quarter, 4.0% in the first quarter this year, and 4.7% in the second quarter.
Service sector loans increased by 19.9 trillion won, marking the largest rise in 14 quarters since the fourth quarter of 2022 (26.1 trillion won). The increase expanded for two consecutive quarters, rising from 10.3 trillion won in the fourth quarter last year to 19.1 trillion won in the first quarter this year and 19.9 trillion won in the second quarter.
Loans to the real estate sector increased by 6.2 trillion won, more than double the previous quarter's increase of 2.5 trillion won. This was attributed to improved lending conditions following an expansion of the guarantee limit for real estate project financing loans.
The increase in loans to the financial and insurance sectors also grew from 4.8 trillion won to 6.2 trillion won. With strong stock market performance through the second quarter leading to increased derivatives trading, securities firms faced higher funding demand in response to margin rate hikes. Meanwhile, loan increases for wholesale and retail trade fell from 5 trillion won to 1.5 trillion won.
Industrial loans rose by 8.4 trillion won, a smaller increase than the previous quarter's 11 trillion won. This was due to improved financial ratios at the end of the half-year period and early repayments by some companies, which reduced facility funding loan increases in manufacturing from 4.4 trillion won to 1.4 trillion won. Construction sector loans maintained the previous quarter's level as working capital increased while facility funding decreased.
By purpose, working capital loans expanded from 21.4 trillion won to 23.8 trillion won due to funding demand for corporate bond repayments and other purposes. Facility funding loan increases declined from 9.4 trillion won to 6.9 trillion won.
By institution type, deposit-taking bank loans increased by 29.3 trillion won, a larger rise than the previous quarter's 25 trillion won. Among these, large corporate loan increases rose from 12.7 trillion won to 16.5 trillion won. Loan increases from non-bank deposit-taking institutional investors contracted from 5.8 trillion won to 1.3 trillion won.
A Bank of Korea official stated, "While there are differences by industry, the second quarter showed a growth trend similar to the first quarter due to factors such as banks' strategies to expand corporate lending." The official added, "While expanding productive finance is a growth factor, risk management by financial institutions and sluggish local real estate markets are restraining factors, so future growth levels will need to be closely monitored."
in ECONOMY
