Local banks' corporate loan growth slows in May

By Kim Soo-yeon
SEOUL, June 10 (Yonhap) -- South Korean banks' corporate lending grew slower in
May than the previous month as more large companies tapped the bond market to
raise capital, the central bank said Wednesday.

As of the end of May, outstanding bank loans to companies amounted to 473.4
trillion won (US$376.9 billion), up 1 trillion won from a month earlier, the Bank
of Korea (BOK) said. The May data compared with a 3.2 trillion won on-month
advance in April.
"Local banks' lending to smaller companies expanded, backed by loan guarantees
from state-run agencies," the BOK said. "But lending to large firms declined as
their loan demand was low because they secured funds in advance by selling
bonds."
Local banks' loans to small and medium enterprises rose by 3 trillion won to
415.3 trillion won, while those to larger companies fell 2 trillion won to 58.1
trillion won, the central bank added.
Meanwhile, the amount of mortgage-backed loans expanded by 2.4 trillion won to
250.9 trillion won, marking the largest monthly growth since March, it added.
Korean lenders have become wary of extending loans to smaller firms due to
concerns over their financial soundness, as problem loans pile up amid the
slumping economy and a corporate restructuring drive. The government, however,
has called on banks to free up credit in an effort to revive the economy.
The data comes a day before the BOK makes its monthly interest-rate decision. The
central bank is widely forecast to freeze the benchmark seven-day repo rate at a
record low of 2 percent for the fourth straight month.
The BOK made six consecutive rate cuts totaling 3.25 percentage points between
October and February in a bid to bolster the slowing economy.
sooyeon@yna.co.kr
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