Individuals’ overdraft credit loans at major South Korean commercial banks have hit a more than three-year high as investors seek funds for stock investments during a bullish market trend. The balance of personal overdraft loans at the country’s five major banks, including KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup, reached 40.5 trillion won (US$27.64 billion) as of Thursday. This amount represents the highest balance since January 2023, when it stood at 40.54 trillion won.
In the days following the end of April, the figure saw an increase of 715.2 billion won. Conversely, demand deposits, considered as standby funds, have been decreasing, indicating a potential shift of funds from bank accounts to stock investments. The combined demand deposit balances at the five banks totaled 696.06 trillion won as of Thursday, showing a decline of 501.3 billion won from the previous month.
“With the stock market showing strong performance, more investors seem to be utilizing short-term liquidity for stock investments,” noted a bank official. The surge in credit loans is also attributed to the stricter government regulations on household loans and the growing demand for supplementary funding related to housing needs. South Korea’s stock market, particularly the benchmark Korea Composite Stock Price Index (KOSPI), has witnessed remarkable growth this year, surging over 70 percent, mainly driven by robust gains in semiconductor stocks. The KOSPI reached a new record high of 7,498 on Friday.
Moreover, retail investors have placed a record number of large orders exceeding 100 million won on the KOSPI in April. The data from the Korea Exchange revealed that the total number of such orders stood at 1,193,158, marking the highest monthly figure to date.
