The Bank of Korea published its October 2026 financial market report, showing faster household loan growth and continued corporate borrowing alongside declines in Treasury bond yields and equities. Demand for safer assets, lower bond yields in major economies and reduced Treasury issuance contributed to falling yields. The KOSPI declined from 6,838 at the end of September to 5,731 at the end of October amid concerns about slowing artificial intelligence investment and intensifying semiconductor competition. By contrast, market rates at short maturities rose on expectations of a further Base Rate increase and expanded funding by banks.
Bank household loans increased by KRW 5.0 trillion, compared with KRW 0.5 trillion in September. Mortgage lending grew by KRW 3.3 trillion, supported by group loans for intermediate payments and moving expenses. Other household loans returned to growth, rising by KRW 1.7 trillion as seasonal effects from September reversed and individual investors made net stock purchases. Corporate lending increased by KRW 10.2 trillion after September’s KRW 10.7 trillion rise. Lending to small and medium enterprises accelerated, supported by banks’ lending activity and demand for funds to pay value-added tax. Corporate bonds recorded net redemptions of KRW 1.7 trillion as companies used alternative funding sources, including bank loans.
Bank deposits increased by KRW 30.4 trillion, following a KRW 29.1 trillion rise in September. Time deposits grew by KRW 24.1 trillion as banks sought funding ahead of corporate deposit maturities and attracted household funds. Funds under management at asset management companies rose by KRW 11.2 trillion, reversing September’s KRW 11.1 trillion decline. Money market funds led the recovery as corporate funds withdrawn at the previous quarter’s end returned and excess Treasury funds flowed in.