[THE INVESTOR] The woes of shipping and shipbuilding industries are affecting other large Korean firms, with major local lenders starting to downsize their amount of loans, according to market data June 21.
Data released by the country’s five commercial banks -- KEB Hana Bank, Kookmin Bank,
Woori Bank, Shinhan Bank and Nonghyup Bank -- show that their outstanding loans to large firms came close to 89.59 trillion won (US$77.2 billion) as of end-May, a 1.83 trillion won slide from 91.42 trillion won at the end of 2015. From a year earlier, the May reading also marked a 5.3 percent drop.
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Such a ddecline comes amid a continued rise in overall corporate loans extended by all local lenders.
As of end-May, overall corporate loans came to 744.1 trillion won, marking a 3.7 trillion won on-month increase that also followed a 6.7 trillion won rise the previous month, the Bank of Korea said earlier.
Bank officials interpreted this as a sign that the firms were borrowing less from commercial banks, but at the same time, a growing tendency of local banks being more cautious in extending loans to large companies that are said to have been hit negatively affected by a slump in exports and lackluster local spending.
South Korea‘s exports have undergone monthly reduction since the start of last year.
In an earlier poll conducted by the central bank, large companies said their sales decreased 2.9 percent on-year in the first three months of the year, while small and medium-sized firms stated their sales increased 2.1 percent on-year over the cited period.
In the first five months of the year, the same five commercial lenders that have cut their lending to large conglomerates have instead extended 10.2 trillion won in fresh loans to small and medium enterprises, their data showed.
As of end-May, loans extended to SMEs by the five commercial banks came to 329.01 trillion won.
“It appears banks are reducing their loans to large companies as part of risk-management efforts, while boosting their lending to SMEs,” a bank official said.
(
theinvestor@heraldcorp.com)