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Credit loans at major banks surge nearly $820 million in one week

Published: 11 Nov. 2025, 19:10

ATMs are seen on a street in Seoul on Jan. 31. [NEWS1]

Credit loans at Korea’s major banks surged nearly 1.2 trillion won ($820 million) in just a week this month as retail investors borrowed heavily to invest in stocks.

The total amount of household credit loans extended by Korea’s five biggest banks — KB Kookmin, Shinhan, Hana, Woori and NH Nonghyup — reached 105.9 trillion won as of last Friday, up 1.18 trillion won from the end of October, according to the banks’ data as seen on Tuesday.

This increase exceeded that for the entirety of October and marked the largest weekly jump since July 2021.

The surge was led by revolving credit lines, which grew by 1.06 trillion won. General credit loans also rose by 115 billion won. Despite volatility in the stock market — with the benchmark Kospi recently falling sharply due to concerns in the AI sector after breaking records by crossing the 4,200 mark— individual investors continued buying dips.

Data from the Korea Exchange shows that while foreign investors sold a net 7.26 trillion won worth of stocks last week, retail investors purchased 7.44 trillion won.

“Investor sentiment remains strong even after the Kospi’s correction, as the index is still at a high level. Many are turning to overdrafts to leverage their investments,” a banking representative said.

The representative added that stricter mortgage lending rules have also driven borrowers to seek credit loans.

This debt-fueled investment frenzy is evident in margin trading. Outstanding margin loans, or funds borrowed by investors from brokerage firms to buy stocks, stood at 26.2 trillion won as of last Friday, the highest level since September 2021 and the third consecutive record high that week, according to the Korea Financial Investment Association.

Kwon Dae-young, the vice chairman of the Financial Services Commission, answers lawmakers’ questions during a plenary session of the National Assembly’s National Policy Committee at the National Assembly in Yeouido, western Seoul, on Nov. 11. [NEWS1]

Meanwhile, a remark from a senior financial regulator stirred controversy. Kwon Dae-young, the vice chairman of the Financial Services Commission, said in a recent radio interview that “young people’s debt-fueled investing can be seen as a form of leverage,” and that “the Kospi could reach 5,000.”

He continued, “[Investors] must ensure their risk exposure stays within manageable limits.”

His comments drew criticism from lawmakers for appearing to encourage borrowing to invest, reflecting the same debt-driven enthusiasm that has fueled the recent surge in credit loans. Kwon said he was merely emphasizing the “importance of maintaining a balanced portfolio and an appropriate level of risk tolerance.”

Experts warn that borrowing excessively only to invest can undermine personal financial stability.

“Many people in their 20s and 30s have taken on risky debt under the belief that not investing means falling behind. But a market downturn could cause deep psychological and financial distress with prolonged recovery periods,” one financial analyst said.

“Most margin loans this year are concentrated in chip and capital goods stocks. If prices fall, forced sell-offs could trigger sharp drops in those sectors,” said Lee Bo-mi, a research fellow at the Korea Institute of Finance.

She noted that since the two sectors account for more than half of the Kospi’s market capitalization, their decline could greatly amplify overall volatility. “If foreign investors withdraw capital, retail investors’ leveraged positions could unravel rapidly, spreading the impact across the market,” Lee warned.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY JEONG JAE-HONG [[email protected]]