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(Seoul=NSP NEWS AGENCY) = As of the end of last year, Korea’s corporate debt was calculated to be KRW 2,734 trillion. In particular, real estate loans accounted for a large portion. In response, the Bank of Korea said, “The profit-seeking behavior of the financial sector has had a significant impact on the expansion of real estate credit supply,” and expressed concern, “If credit is concentrated in the real estate sector with low capital productivity, the effect of creating added value of capital is likely to decline.”

According to ‘BOK Issue Note: Current Status and Implications of Korea’s Corporate Debt’ published by the Bank of Korea on the 20th, Korea’s corporate debt was KRW 2,734 trillion as of the end of 2023, a total increase of KRW 1,036 trillion since 2018 when the increase began in earnest.

The ratio of Korea’s corporate debt to nominal GDP(gross domestic product) (hereinafter referred to as corporate debt leverage) has increased significantly, reaching 122.3% at the end of 2023, an increase of 29.8 percentage points compared to the end of 2017(92.5%).

In particular, the expansion of credit supply to the real estate sector has become a major factor in the rise in corporate debt. The balance of loans related to the real estate industry in the financial sector increased by KRW 301 trillion from 2018 to 2023, which is about 29% of the increase in total corporate debt during the same period. The ratio of real estate loan balance to nominal GDP also increased from 13.1% in 2017 to 24.1% at the end of 2023.

The Bank of Korea emphasized that restructuring must continue even if the monetary policy stance changes in the future.

By Soon-ki Lee(s8789@nspna.com) and Soo-in Kang(sink606@nspna.com)

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