The fever for debt-financed investment, known in Korea as "bit-tu," shows no signs of cooling, with the usage of line-of-credit loans (minus-tongjang) at major commercial banks reaching its highest level in three years and eight months.

Although banks have been scrambling to introduce management measures, they have been unable to curb the use of credit lines that have already been established.

The utilization rate of these credit lines is now at its highest point since the COVID-19 pandemic.

As of June 25, the outstanding balance of personal line-of-credit loans at the five major commercial banks (KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup) was recorded at 43.3363 trillion won.

Compared to historical month-end balances, this is the largest figure in three years and eight months since the 43.6609 trillion won recorded at the end of October 2022.

The outstanding balance of these loans at the five major banks has been increasing by the trillion-won mark for two consecutive months, starting from May.

The balance rose from 39.6675 trillion won at the end of April to 41.5324 trillion won at the end of May, an increase of 1.865 trillion won, and grew by another 1.8039 trillion won in June.

The increase in May was the largest in five years and one month since April 2021, and June saw a similar scale of growth.

The growth in the loan balance slowed from 810.6 billion won in the first week of June (June 1–4) to 473.9 billion won in the second week (June 8–11) and 130.8 billion won in the third week (June 15–18), but expanded again to 388.6 billion won in the fourth week (June 22–25).

It appears that debt-financed investment using credit lines has increased as the KOSPI experienced sharp volatility last week, plummeting by nearly 10% before rebounding by 5%.

The total outstanding balance of personal credit loans, including line-of-credit loans, stood at 108.7272 trillion won as of June 25, the highest level in three years since June 2023.

The growth in personal credit loans in June was the largest in five years and two months since April 2021.

The actual utilization rate of credit lines compared to their limits has also risen to its highest level since the COVID-19 pandemic.

The average utilization rate of credit lines at the five major commercial banks was 44.8% as of June 25.

As of June 25, the total combined limit for credit lines opened at the five banks was 96.7469 trillion won, of which 43.3363 trillion won was actually drawn.

The utilization rate for each bank ranged from 43.3% to 46.8%.

For one bank, this was an all-time high, while for the other four, it was the highest level since 2021, a period when stock prices surged following the COVID-19 pandemic.

There is potential for further increases in the use of these credit lines.

According to the Financial Stability Report for the first half of the year released by the Bank of Korea on June 24, the utilization rate of line-of-credit loans at domestic banks was in the 33%–35% range in 2024, rising to 35.4% at the end of last year and further to 36.0% in the first quarter of this year.

As credit loans have grown more steeply in the second quarter, the overall utilization rate is expected to have risen further.

In the report, the Bank of Korea pointed out that "the possibility of accumulating financial imbalances due to increased asset investment using leverage, and concerns over the expansion of insolvency in vulnerable sectors due to changes in financial conditions, remain as potential instability factors in our financial system."