Foreign banks operating in Korea are zeroing in on high-return household lending, data showed Wednesday, raising concern they may be reluctant to extend loans to companies in a bid to maximize profits and shun risks.
Corporate loans by Standard Chartered Bank Korea, the local unit of Standard Chartered Plc, reached 8.9 trillion won ($7.9 billion) as of end-September, while the comparable figure for household loans came to 26.9 trillion won, nearly three times its corporate lending, according to the data.
Citibank Korea's home loans amounted to 14.3 trillion won, outweighing its corporate loan total of 9.6 trillion won.
The data contrasts with the lending trend of homegrown banks. As of end-September, local lenders' corporate loans came to 582.6 trillion won, or 55 percent of total loans, while home loans accounted for 445.1 trillion won, or 42 percent of the total.
State audit data, meanwhile, showed the interest margin, the gap between lending and borrowing rates, came to 4.07 percent for Citibank, much higher than the overall average of 2.97 percent.
Market watchers raised concerns that lackluster corporate lending may worsen local firms' borrowing circumstances amid ongoing external uncertainties, and urged foreign banks to step up their public role in Korea.
Some, however, said it is unfair to criticize foreign banks' lending practices.
"They should be regulated against unlawful actions but criticizing their lending practices, which are part of corporate strategy, is an outdated approach in a free market," said an industry official.
Foreign lenders acknowledged the high portion of household loans, but said they support the corporate sector through other services.
"The lending portion is partly due to structural reasons. Meanwhile, efforts are under way to help local companies go overseas on the back of our global network and knowledge," said an official from Standard Chartered. (Yonhap)