Value context and insight. lkm@koreatimes.co.kr
Banks turn to corporate lending amid tightened mortgage rules
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By Lee Kyung-min
Commercial lenders are fortifying corporate lending, stymied by rapid saturation of the mortgage market due to tightened household debt regulations, market watchers said Thursday.
The financial authorities seek to cap the year-on-year growth of household debt at mid-2 percent, lower than the county’s GDP growth forecast of 2.5 percent this year. Korea's ratio of household debt to GDP is among the highest of major economies, despite the revision of the base year to 2020 from 2015.
The combined outstanding corporate loans of KB Kookmin, Shinhan, Hana, Woori and NH NongHyup came to 803.3 trillion ($579 billion) at end-May, up 7.2 trillion won from the previous month. The five consecutive months of increases marked a year-to-date jump of 36.9 trillion won.
Hana was elevated as the second-largest player in corporate lending last June, propelled by loans tailored for small and medium-sized enterprises (SMEs) and self-employed. The growth of Hana’s corporate loans doubled compared to its peers last year.
“We were able to expand the scope of our customers, underpinned by pricing policies reflective of voices and concerns from branch officials that maintained close communications with borrowers,” a Hana official said.
The lender plans to make greater use of a Corporate Financing Coordinator, a comprehensive marketing tool developed to better meet the needs of customers.
"The program will be an efficient support system to cater to borrowers in need of adjusting interest rates and other services.”
Woori established Biz Prime Center in a total of eight industrial complexes nationwide to service SMEs.
The lender was able to extend about 149 trillion won in corporate loans as of end-May, already surpassing 93 percent of this year’s target of 160 trillion won.
The success is expected to bolster the lender’s growth initiative, as outlined by Woori Bank CEO Cho Byung-kyu’s plan to reclaim a position as the top corporate lending service provider by 2027.
The solid ground of the current top player KB Kookmin is buttressed by a combined 14 trillion won in interest cost reduction for its top corporate customers.
The program spearheaded by the head office implemented in April has led to a similar discretionary lowering of 2.2 trillion won before July.
“We strengthened our discretionary program to retain a greater number of high-priority customers,” a KB official said.
Shinhan established its Shinhan SOL Cluster whereby bank employees’ reach of marketing and financial consulting efforts targets industrial complexes in cities and regions with high government-aided manufacturing concentrations.