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Competition is becoming fiercer among Korea's major banks in the small- and medium-sized enterprises (SME) lending market, after the government toughened rules on loans to households to curb property speculation.
According to data from the "Big Four" ― KB Kookmin, Shinhan, Woori, KEB Hana ― they have increased their lending to SMEs significantly to secure new revenue streams.
KB Kookmin increased the amount to 98.3 trillion won from 89.6 trillion won, while Shinhan lent 85.7 trillion won, up from 78.7 trillion won.
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The Moon Jae-in administration's anti-speculation measures, including stricter lending and heavier taxes, put them in a strained position as many of their would-be customers are now unable to borrow as much money to buy homes they don't live in for short-term gain.
The competition triggered by the government policy is expected to worry the state-run Industrial Bank of Korea (IBK) which has SMEs as a firm customer base.
While the IBK's loans extended to SMEs increased to 151 trillion won from 142 trillion won over the same period, the move by the four commercial lenders is considered a growing threat given they are strengthening their financial services for the viable new customers.
The IBK said it would strengthen knowhow secured through years of experience in providing services that best meet corporate needs.
"We have a highly competent workforce well-versed in issues concerning SMEs. While other banks may seek to poach our clients, we believe we will keep serving our customer base in the best way we know," an IBK official said.
Commercial lenders plan to support SMEs as a key part of their growth plans.
"Landing SMEs as our customers is a strategy for us to diversify our base thereby helping us maintain sustainable growth," a Shinhan official said.
