Bank Overdraft-Style Loan Balances Near 70 Trillion Won, Highest Since End-2021

[Financial News] Outstanding balances on bank overdraft-style loans rose by more than 6 trillion won through the end of July this year, approaching 70 trillion won.
According to data that People Power Party lawmaker Park Sung-hoon of the National Policy Committee received from the Financial Supervisory Service on the 14th, the outstanding balance of minus-account loans at domestic banks stood at 69.7283 trillion won at the end of July. This was an increase of 608.74 billion won, or 9.6%, from 63.6409 trillion won at the end of last year. The figure represents the amount borrowers actually drew, not the loan limits approved by banks.
Over the same period, the number of minus-account loans rose by just 24,317, from 4,869,319 to 4,893,636, an increase of 0.5%. Although the growth rate in the number of accounts remained below 1%, total outstanding loan balances increased by nearly 10%.
The outstanding balance per account, calculated by dividing the total balance by the number of active accounts that had not been closed, rose from 13.07 million won at the end of last year to 14.25 million won at the end of July this year. The average amount borrowed per account increased by 1.18 million won, or 9.0%, over the seven-month period.
Most of this year’s increase in minus-account loan balances was concentrated between April and July. The increase during that period totaled 5.7827 trillion won, accounting for 95.0% of the cumulative increase through the end of July. In particular, minus-account balances rose by 1.1496 trillion won even in July, when the domestic stock market underwent a sharp correction.
The balance at the end of July was the largest compared with balances at the end of previous quarters since the end of 2021, when it stood at 70.1814 trillion won. In 2021, individual investors rushed into stocks amid low interest rates and ample liquidity following the shock of the COVID-19 pandemic. The recent increase in minus-account balances is also believed to be linked to individual investors’ demand for “debt-financed investing.”
[email protected] Ye Byung-jung Reporter