With an increase in credit loans driven by methods such as "debt investment, using borrowed funds for investments," commercial banks and online-only banks have tightened their lending criteria, whereas regional banks appear to still have capacity to handle overall household loan expansion. This is attributed to their smaller loan processing volumes and differing initial growth target rates.
As reported by the banking industry on the 2nd, local banks including BNK Busan, BNK Kyongsangnam, Gwangju, and Jeonbuk have not yet introduced strict measures such as halting credit loan approvals or significantly cutting back borrowing limits.
This differs from large commercial banks such as KB Kookmin, Hana, and Woori Bank, along with online-only institutions like KakaoBank and Toss Bank, which have consistently limited credit loan amounts to a cap of 100 million South Korean won. Kbank has also recently stopped issuing new loans for negative balance accounts.
Regional banks have an average household loan growth target of about 4% this year, which is less strict than the 0.5% objective set for large commercial banks. This reflects the reality that although their growth rates may be greater, the actual size of their household loans is still lower, resulting in a minimal effect on the overall volume of household lending.
Large commercial banks have already surpassed their home loan goals for this year and are becoming more cautious with lending practices, whereas local banks still have capacity left. During a recent examination by the Financial Services Commission regarding residential loans, local banks reportedly mentioned they can handle higher growth levels without surpassing end-of-year limits.
Nevertheless, local banks are carefully observing the "balloon effect," in which borrowing requests become concentrated as lending criteria at large commercial and online-only banks increase. At present, the majority of regional bank credit loans can be submitted remotely without needing to visit a physical office.
For instance, BNK Kyongnam Bank has temporarily halted issuing new credit loans through third-party services such as Toss or KakaoPay. As the majority of new credit loans at local banks are processed through these channels, this decision significantly limits expansion.
A representative from a local bank stated, "Although there hasn't been an immediate increase in loan applications just yet, worries remain that customers struggling with large financial institutions might start coming to us later this year, which is why we're keeping track of our monthly goals. We still have space under the rules set by regulators and aren’t thinking about actions such as stopping new loans."