SEOUL: The amount of loans extended to industries by local banks continued to rise in the second quarter, but its pace of growth slowed due mainly to a fall in lending to manufacturers and builders, data showed Monday.
Outstanding loans to local companies totaled 911.8 trillion won ($770.6 billion) in the April-June period, breaking the 900 trillion-won mark for the first time, according to the data by the Bank of Korea.
From three months earlier, the amount increased 12.3 trillion won, slowing from a 16.6 trillion-won increase in the January-March period. The slower growth was largely attributed to a fall in lending to manufacturers and builders.
Loans to manufacturers increased 2.7 trillion won on-quarter to 318.6 trillion won, sharply slowing from 7.7 trillion-won growth in the previous quarter. Loans to the construction sector fell 249.8 billion won, reversing from a 1.5 trillion-won gain in the first quarter.The data, meanwhile, showed that loans to the property developing and leasing industry gained a record 6.6 trillion won to 141.8 trillion won.
Lending to companies in the sector has been increasing since last year in tandem with an improving property market and four rounds of rate cuts by the central bank that sent the key interest rate to a record low of 1.5 percent.
“Among many factors that led to an increase, it seems that loans to the property developing and leasing sector gained as more peopled turned to other sources of investment amid low interest rates,” explained a BOK official. Loan growth overall accelerated in the service sector, growing 9.2 trillion won, compared with a 7.4 trillion-won increase in the first quarter, the data showed.
