Individuals’ overdraft credit loans at major commercial banks in South Korea have surged to their highest level in over three years, reflecting a strong appetite for stock investments amid a bullish market. The latest data reveals that the balance of personal overdraft loans, commonly referred to as “minus accounts,” reached 40.5 trillion won (approximately US$27.64 billion) at five major banks, including KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup, as of last Thursday.
This figure marks the highest since January 2023, when the total stood at 40.54 trillion won. Notably, the amount witnessed a notable increase of 715.2 billion won over just three business days following the end of April.
In contrast, demand deposits—a type of standby funds—have experienced a downward trend. As of Thursday, the combined balance of these demand deposits at the five banks was recorded at 696.06 trillion won, reflecting a decline of 501.3 billion won from the end of the previous month. The decline was even sharper in April, with a reduction of 3.36 trillion won observed throughout the month.
A bank official pointed out that the rally in the stock market has led many investors to utilize short-term liquidity for stock investments. Additionally, stricter government regulations on household loans appear to contribute to an increased demand for credit loans, which are often used to bolster funding needs related to housing.
The South Korean stock market, represented by the Korea Composite Stock Price Index (KOSPI), has emerged as one of the best-performing markets globally this year. The KOSPI has surged over 70%, largely driven by significant gains in the semiconductor sector. Recently, the index reached a new record high of 7,498.
Further illustrating this trend, the number of large orders exceeding 100 million won placed by retail investors on the KOSPI in April amounted to an unprecedented 1,193,158, marking the highest monthly total ever recorded, according to data from the Korea Exchange.
