April 19, 2024

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South Korean savings banks’ loans extended to self-employed businesses spiked more than 30 percent in the fourth quarter of last year, data showed on April 1.

Lending for self-employed extended by the country’s 79 savings banks stood at 13.71 trillion won ($12.09 billion) in the fourth quarter of 2018, up 31.5 percent from a year earlier, according to the data from the Financial Supervisory Service.

The growth is far steeper than corresponding numbers for household loans, which went up 10.6 percent on-year to 23.68 trillion won, the data showed.

“The government’s tougher regulations on household lending appear to have prompted the savings banks to turn their eyes to corporate customers, particularly those who run businesses on their own,” a bank official said, requesting anonymity.

Starting this year, savings banks are required to adopt tougher guidelines for mortgage loans, in the government’s latest push to slow the growth of household debt.

The stricter lending calculation for home mortgages, named the Debt Service Ratio by the financial authorities, uses a new system that measures all debt principal and interest payments as a proportion of annual income.

By Ram Garikipati and newswires (ram@heraldcorp.com)