Investing.com - Loan growth at South Korean banks rebounded to 3.5% year-over-year in May, driven by corporate loans which rose 4.6% and household loans which increased 2.3%, according to data analyzed by Macquarie.
Corporate lending remained the primary growth driver, supported by government-led productive finance initiatives. Household lending improved mainly on stronger demand for equity market-related unsecured loans, while mortgages increased for the second consecutive month as housing transaction volume recovered.
Mortgage growth remained subdued at 2.5% year-over-year, the slowest pace since October 2023. Deposit growth reached 6.6% year-over-year in May, lifting the current account and savings account ratio to 39.5%.
Macquarie notes that household loan demand is benefiting from stronger unsecured lending and housing transactions recovery, but expects regulatory measures to continue limiting overall growth. Unsecured loans represent only approximately 10% of major banks' loan books.
Banks are introducing voluntary measures to manage household debt growth, including tighter credit loan limits for high-income borrowers. Macquarie sees limited upside to mortgage growth following the June 2025 mortgage regulations imposing a 600 million won mortgage cap and the October 2025 expansion of designated regulated areas.