South Korean banks curb household loans as profits hit record high

South Korea's five major financial holding companies—KB Financial Group, Shinhan Financial Group, Hana Financial Group, NH Nonghyup Financial Group and Woori Financial Group—recorded combined first‑half net earnings of more than 13 trillion won, a 9.7% increase year‑on‑year. At the same time, household loan balances grew sharply, exceeding the regulators' annual target by over 1 trillion won and pushing estimated loss‑covering loans above 1 trillion won, the highest level in seven years.

Regulators have shifted focus from profit to risk management, introducing stricter measures on voice‑phishing data sharing, tighter warnings on complex ELS products and heightened scrutiny of governance structures. The five groups were designated as domestic systemically important banks (D‑SIBs) for 2027, subjecting them to an additional 1% capital buffer.

In line with this pressure, Hana Bank announced a temporary halt to new variable‑rate mortgage loans and to non‑face‑to‑face mortgage lending, while limiting new overdraft (minus‑account) limits to 50 million won and keeping the per‑borrower credit‑loan cap at 100 million won. Other banks are similarly tightening loan‑supply controls to manage household‑debt growth amid rising interest rates.