The corporate loan growth of South Korean banks accelerated in March as government credit guarantees helped smaller companies borrow more, Yonhap News Agency reported Wednesday, quoting the central bank.
As of the end of March, outstanding bank loans to companies totaled 469.2 trillion won ($350.9 billion), up 2.1 trillion won from a month earlier, the Bank of Korea (BOK) said. The March figure contrasted with a 1.5 trillion won month-on-month advance in February.
"Bank lending to smaller firms expanded, helped by loan guarantees by state-run agencies," the BOK said. "Meanwhile, loans to conglomerates dipped as firms tried to bolster their end-quarter balance sheets and improved market conditions lured them into debt instruments."
Local banks' loans to larger companies decreased by 1.3 trillion won to 60.1 trillion won. Lending to small and medium enterprises, however, rose by 3.4 trillion won to 409.1 trillion won, the central bank added.
Korean lenders have become wary of extending loans to smaller firms due to fears over their financial health, as more companies tip toward insolvency amid sluggish consumption and a corporate restructuring drive. The government, however, has called on banks to free up credit in an effort to revive the slowing economy.
Meanwhile, bank deposits declined last month as falling interest rates prompted customers to move their money elsewhere. Outstanding deposits fell by 5.2 trillion won to 916.4 trillion, the BOK said.
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 second straight month.