Gross consumer lending’s growth is continuing to outperform outstanding balance, driven by card lending, as local consumers spend more with the reopening of society and cross-border travel. However, outstanding balance on card lending (encompassing card purchases and loans against the card) has notably risen in 2023 to outperform gross lending.
According to the Financial Stability Report released by the Monetary Policy Committee of the Bank of Korea (released on 21 June 2023), the first quarter of the year saw consumer debt record marginally lower growth compared to the first quarter of 2022. However, from April 2023, consumer debt once again started to rise, and according to the Bank of Korea, this trend is expected to persist.
Total consumer lending in South Korea has experienced a notable upswing, primarily attributed to the escalating demand for mortgages/housing. The background of this surge in borrowing from households stems from an increased inclination towards property-related loans, driven by the revived sentiment in the real estate market.
In the dynamic landscape of South Korea's financial trends, the Buy Now Pay Later (BNPL) phenomenon is experiencing a unique trajectory, diverging from global patterns. Unlike widespread adoption seen globally, BNPL services are currently exclusive to technology-related companies such as Naver, Coupang, Toss, and Kakao in South Korea.
The financial landscape in South Korea is witnessing dynamic shifts, with increasing consumer debts triggering a series of interest rate hikes in the banking sector. Key players in the banking industry have responded with interest rate hikes on various consumer lending products, aligning with market interest rate spikes.
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Consumer Lending
Aggregate of Consumer Credit and Mortgages/Housing. Gross Lending: The total value of loans advanced by institutions in a given year; data refers to single year only. Outstanding Balance: The collective amount owed by borrowers at the end of a given year; data refers to the cumulative impact of debt.
See All of Our DefinitionsThis report originates from Passport, our Consumer Lending research and analysis database.
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