Loans provided to businesses in South Korea experienced their most rapid expansion in three and a half years during the first quarter, driven by strong demand from the service sector, as per data from the Bank of Korea. The total outstanding loans to local companies stood at 2,061.8 trillion won (US$1.33 trillion) by the end of March, marking a 35.6 trillion won increase from the previous quarter.
This growth represents the largest quarterly surge since the third quarter of 2022, when corporate loans spiked by 56.7 trillion won. The Bank of Korea noted that banks have been increasing corporate loans in response to signs of economic recovery. Loans to manufacturing firms rose by 11.1 trillion won to 513.8 trillion won, while loans in the service sector surged by 24 trillion won to 1,317.7 trillion won, particularly in financial and retail sectors.
In terms of loan purposes, operating funds saw a 26.2 trillion won increase in the first quarter, following a 1.9 trillion-won gain in the previous quarter. Facility investment loans also rose by 9.4 trillion won, showing a faster pace compared to the previous quarter. Meanwhile, South Korean stocks faced a decline of over 6 percent on Monday morning, influenced by a tech slump and concerns over the U.S. Federal Reserve’s stance. The local currency also weakened against the U.S. dollar, hitting a 17-year low.
