▲ Bank counter (File Photo)
The outstanding balance of minus account (revolving credit line) loans at commercial banks has increased by over 6 trillion won in the first seven months of this year, approaching 70 trillion won.
While the number of accounts has remained virtually flat, the average loan balance per account has grown rapidly.
With loan balances returning to the levels seen at the end of 2021—when low interest rates and investment booms followed the spread of COVID-19—borrowers are facing significantly heavier interest burdens due to much higher interest rates compared to that period.
According to data submitted by the Financial Supervisory Service to Representative Park Sung-hoon of the People Power Party, a member of the National Assembly's National Policy Committee, on September 14, the outstanding balance of minus account loans at domestic banks stood at 69.7283 trillion won at the end of July.
This represents an increase of 6.0874 trillion won (9.6%) from 63.6409 trillion won at the end of last year.
This figure represents the actual amount borrowed and used by borrowers, rather than the credit limits approved by banks.
Conversely, over the same period, the number of minus account holders rose by only 24,317 (0.5%), from 4,869,319 to 4,893,636.
While the growth rate of accounts stayed below 1%, the total loan balance increased by nearly 10%.
The average loan balance per account, calculated by dividing this total balance by the number of active, unclosed accounts, increased from about 13.07 million won at the end of last year to about 14.25 million won at the end of July this year.
The average borrowed amount per account grew by about 1.18 million won (9.0%) over the seven-month period.
Most of the increase in minus account loan balances this year was concentrated between April and July.
During this period, the increase in the balance reached 5.7827 trillion won, accounting for 95.0% of the cumulative increase from the beginning of the year through the end of July.
In particular, even in July, when the domestic stock market underwent a steep correction, the minus account balance grew by 1.1496 trillion won.
Over the course of that month, the number of accounts increased by about 0.1%, while the balance expanded by 1.7%.
The balance at the end of July this year was the largest since the end of 2021 (70.1814 trillion won) when compared with previous quarter-end balances.
The year 2021 was a period when retail investors fueled a stock investment craze, driven by low interest rates and abundant liquidity in the immediate aftermath of the COVID-19 shock.
It was a time when the KOSPI surpassed the 3,000 mark for the first time as so-called "Donghak ants" (retail investors) emerged as the main buyers in the stock market.
The recent increase in minus account balances is analyzed to be closely related to retail investors' demand for "bit-tu" (investing with borrowed money).
In connection with this, the Bank of Korea estimated in its monetary and credit policy report released on the 10th that leveraged investments utilizing other financial sector loans, such as credit loans and insurance policy loans, expanded significantly in the second quarter of this year.
The problem is that the current cost of borrowing money is much higher than it was at the end of 2021.
The average interest rate on minus accounts, calculated by applying weights to loan balances by bank, rose by about 1.70 percentage points (p) from 3.94% per annum at the end of 2021 to 5.64% at the end of July this year.
For example, Shinhan Bank saw its rate rise from 3.71% to 5.16% over the same period, while Woori Bank's rate increased from 3.74% to 5.44%.
KakaoBank's rate climbed from 4.25% to 6.42%.
As loan volumes head toward another peak, interest rates are considerably higher than they were back then.
This implies that the burden of repaying principal and interest has grown heavier accordingly.
Furthermore, as leveraged investment positions were rapidly liquidated during the stock price correction process after late June, some raise the possibility that the repayment capacity of retail investors who bought stocks by borrowing money through minus accounts and other means may have shrunk significantly.
In response, Representative Park Sung-hoon urged that financial authorities should comprehensively inspect household financial conditions and reliance on loans rather than merely managing total loan volumes.
Representative Park pointed out, "The fact that the number of accounts remains unchanged while loan balances have surged significantly means that households' reliance on emergency funds is growing just as much," adding, "It is difficult to solve the household debt problem with policies that only manage loan figures while household cash flow worsens."
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