April 20, 2024

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South Korean companies and households increased their borrowing last month while greatly reducing their bank deposits, central bank data showed on May 13.

In April, local households newly borrowed 4.5 trillion won ($3.82 billion) from banks, sharply up from 2.9 trillion won in the month before, according to the data from the Bank of Korea.

Bank lending to companies also jumped six-fold to 6.6 trillion won from 1.1 trillion won over the cited period.

Bank deposits, on the other hand, dropped from a 21.3 trillion-won gain in March to a 5.2 trillion-won deficit in April.

The central bank said the rise in household loans may have been triggered by increased demand for mortgages, noting that home-backed loans came to 3.6 trillion won last month, compared with 2.8 trillion won in March.

Still, the sharp increase in bank loans to households and companies comes amid apparent signs of a slowdown.

The BOK earlier said the local economy unexpectedly contracted an estimated 0.3 percent in the first three months of the year from the previous quarter.

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