The increase in household loans at banks last month contracted for the second consecutive month. While the expansion in housing collateral loans widened again due to a delayed reflection of increased housing transactions in the capital area, other loans such as credit loans turned negative amid stock market corrections and strengthened bank management.
According to the Bank of Korea's "August 2026 Financial Market Trends" released on the 9th, household loans at banks last month totaled 1,198.3 trillion won, an increase of 3.4 trillion won from the previous month. The growth rate narrowed for two consecutive months: from 7.6 trillion won in June to 5.5 trillion won in July and further to 3.4 trillion won in August.
Housing collateral loans saw their growth expand instead. In August, jumbo loans increased by 4 trillion won, up from the previous month's 3.5 trillion won increase. This is interpreted as a delayed effect of increased housing transactions and new supply in the capital area since May leading to loan disbursements.
The decline in Jeonse (rental deposit) financing loans continued. After decreasing by 700 billion won in June and 800 billion won in July, Jeonse loans fell by another 700 billion won in August.
Other loans, including credit loans, dragged down the overall household loan growth trend. Other loans decreased by 600 billion won in August, marking a decline for the first time since April after four months of growth. While other loans had increased by 3.7 trillion won in May and 3.3 trillion won in June due to factors such as retail investors' capital demand driven by stock market optimism, the growth narrowed to 2 trillion won in July before turning negative in August.
The Bank of Korea explained that the slowdown in individual stock investments and strengthened bank management of credit loans influenced the decline in other loans. Despite the expanded growth in jumbo loans, the overall household loan growth contracted as demand for credit loans related to so-called 'margin investing (investing with debt)' decreased.
In contrast, corporate loan growth expanded. In August, corporate loans at banks increased by 9.7 trillion won, a larger rise than the previous month's 7.7 trillion won increase. Large corporate loans rose by 4.9 trillion won amid strengthened lending activities by major banks and capital demand for bond repayments. SME (small and medium-sized enterprise) loans also increased by 4.8 trillion won, supported by financial support from some banks.
Corporate direct financing market fundraising continued on a weak trend. Corporate bonds saw net repayments of 90 billion won due to issuance burdens from rising interest rates and seasonal off-season effects. In contrast, corporate papers (CP) and short-term bonds saw net issuances of 4.1 trillion won driven by working capital demand from some public corporations, while stock issuances totaled 500 billion won.
Bank deposits shifted from a 3 trillion won decrease in July to a 10 billion won increase in August. While time-and-notice deposits fell by 1.4 trillion won due to corporate fund withdrawals for corporate tax payments, fixed-term deposits increased by 2.03 trillion won due to household fund inflows and temporary deposits of local government funds. Asset management company deposits also rose by 2.35 trillion won, centered on equity-type funds.
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