The Bank of Korea reported a substantial rise in Treasury bond yields in September, alongside a slowdown in household lending and faster growth in corporate bank loans. Bank deposits increased sharply as quarter-end corporate funds moved out of money market funds, while the KOSPI fell significantly in October amid concerns about weaker artificial intelligence investment and intensifying semiconductor competition. The three-year and 10-year Treasury yields reached annual highs of 4.12% and 4.60%, respectively, driven by Middle East tensions, higher oil prices, expectations of a U.S. Federal Reserve rate increase and rising long-term yields in major economies. Bank household loans increased by KRW 0.6 trillion, down from KRW 3.5 trillion in August, as mortgage growth slowed and other loans declined by KRW 2.3 trillion. Corporate bank lending rose by KRW 10.7 trillion, led by KRW 7.5 trillion of lending to large companies, while higher rates and increased maturities pushed corporate bonds to net redemptions of KRW 3.4 trillion. Bank deposits increased by KRW 29.1 trillion, including a KRW 24.7 trillion rise in transferable deposits linked mainly to quarter-end financial ratio management. Assets managed by asset management companies declined by KRW 11.1 trillion as money market funds recorded KRW 25.6 trillion of outflows.
Bank of Korea reports higher bond yields, slower household lending and stronger corporate borrowing in September
The Bank of Korea reported that Treasury yields rose substantially in September, while household loan growth slowed to KRW 0.6 trillion and corporate bank lending accelerated to KRW 10.7 trillion. Bank deposits increased by KRW 29.1 trillion as quarter-end corporate funds shifted from money market funds. The KOSPI fell sharply in October on concerns about weaker artificial intelligence investment and greater semiconductor competition.