Lending from South Korean banks across both the household and corporate sectors saw a notable downturn in December 2025. According to data from the Bank of Korea (BOK), household debt shrank by KRW2.2 trillion during the month. This decline was primarily driven by a drop in mortgage demand, specifically for “jeonse” deposit loans, alongside stricter lending standards enforced by banks as the year came to a close.
The BOK noted that other types of personal loans also fell sharply. This was attributed to a cooling interest in both domestic and international stock market investments, as well as typical year-end activities such as the sale or write-off of non-performing loans.
On the corporate side, the contraction was even more significant, with total business lending falling by KRW11.5 trillion compared to November. Large corporations reduced their debt by KRW2 trillion, largely through temporary repayments of overdraft accounts to improve their year-end financial ratios. Simultaneously, loans to small and medium-sized enterprises (SMEs) decreased by KRW6.3 trillion as major lenders pulled back on credit to strengthen their own capital adequacy ratios.
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