South Korean banks' lending to large companies fell in the first nine months of the year amid a protracted economic slump, despite an upturn in overall loans, industry data showed Monday.

Outstanding loans extended by Shinhan Bank, Kookmin Bank and four other major lenders reached 1,035.85 trillion won ($898.6 billion) as of end-September, up 56 trillion won from 979.6 trillion won tallied in January, according to the data.

A combined 499.5 trillion won went to small and medium enterprises and mom-and-pop stores in September, up 37.8 trillion won from 461.8 trillion won in January.

Home-backed household loans rose 14.9 trillion won to 331.5 trillion won over the cited period.

However, outstanding bank loans to big companies came to 99.8 trillion won as of end-September, down from 102.9 trillion won eight months earlier.

The loss was attributed to banks tightening their lending to troubled corporations out of fears about bad loan provisions, and shipbuilding and construction big names, such as Daewoo Shipbuilding & Marine Engineering Co. and Keangnam Enterprises, facing a liquidity crunch stemming from a long slump in the industry.

Hana Bank, which has been renamed KEB Hana Bank after a merger with Korea Exchange Bank, set aside 888.6 billion won for bad loan expenses last year, with 352.9 billion won, or 39.7 percent, for large companies.

Woori Bank saw the rate reach 39.8 percent out of its overall 2.8 trillion won in bad loan expenses.

"In a downturn cycle, lending to large companies can deal a hard blow to banks. Now we tend to increase loans to SMEs and self-employed businesses as they have lower delinquency rates and higher profitability," a Seoul bank official said. (Yonhap)