Published : Dec. 12, 2018 - 09:10
Nonbank loans for conglomerates have declined this year, while those for small and medium-sized enterprises have increased, reflecting shrinking investing sentiment among large companies and financial difficulties for small businesses, central bank data showed Wednesday.
The outstanding loans to large companies as of end-September stood at 16.72 trillion won ($14.82 billion), down 787.5 billion won from the end of last year, according to data released by the Bank of Korea. This was the first time that the corresponding figure marked a downturn in September since year 2014.
Loans to SMEs, on the other hand, rose 26.69 trillion won to 140.59 trillion won during the same period. The figure has marked a steady rise so far this year, keeping up a monthly increase pace of 30 percent or more.
(Yonhap)
The contradicting figures were seen as reflecting the challenges faced by respective groups. While conglomerates are tightening grip over investment amid uncertain economic outlooks, smaller businesses are increasingly relying on loans -- not only from banks -- in order to sustain business, market observers noted.
Nonbank loans refer to the relatively high interest rate loans from nonbank financial institutions such as savings banks and credit cooperatives. An uptrend in the balance is usually seen as an indicator for a rise of marginal businesses.
The key reason for the latest rise in nonbank borrowing by small businesses is prolonged economic uncertainty and slow growth, which especially impacts owner-operators trying to tread water amid plummeting profits.
Loans from commercial banks also increased for SMEs, with the total balance standing at 689.27 trillion won, up 35.57 trillion won from the end of last year. For conglomerates, the figure climbed 5.47 trillion won to 166.37 trillion won during the same period.
The increasing pace for SMEs was almost five times that for conglomerates, data showed.
By Bae Hyun-jung (tellme@heraldcorp.com)