South Korean banks overshoot loan targets, warning of loan cliff

South Korea’s five major banks – KB Kookmin, Shinhan, Hana, Woori and NH Agricultural – have all exceeded the annual household‑loan growth limits (0.59‑0.71%) imposed by the Financial Supervisory Service. Data from a parliamentary inquiry shows that by May the banks had already used about half of the allowance for new credit‑loan disbursements, prompting concerns that a sharp reduction in lending, dubbed a “loan cliff,” could hit in the second half of the year.

At the same time, rates on revolving‑credit (minus‑account) products for high‑credit borrowers have risen above 5%. The average rate for borrowers with credit scores of 901‑950 reached 4.96%, with Woori, NH Agricultural and Shinhan reporting rates over 5%. Overall credit‑loan balances have continued to grow, increasing by roughly 1 trillion won month‑on‑month, while the broader rise in market interest rates, fed by higher policy rates abroad, adds pressure on borrowers and amplifies banks’ tightening of loan conditions.