South Korea's corporate loans have risen sharply this year amid the coronavirus outbreak, leading the overall surge in the country's money supply, central bank data showed Wednesday.

The country's M2 money supply came to 3,065.8 trillion won ($2.56 trillion) at the end of May, up 10.6 percent from a year earlier, according to the data from the Bank of Korea (BOK).

It marks the largest amount ever, and the on-year growth rate also represents a record high.

Corporate lending contributed more than 60 percent to the annualized increase, with household loans contributing only 20 percent.

Outstanding corporate loans increased by 177.3 trillion won over the cited period, accounting for 60.6 percent of the M2 gain of 292.6 trillion won.

A key economic indicator closely watched by authorities, M2 is a measure of the money supply that counts cash, demand deposits and other near money that is easily convertible to cash.

As of end-May, outstanding corporate loans soared 14.9 percent from a year earlier, far outpacing the 4.9 percent hike in household loans.

Local companies are widely seen as having rushed to secure cash amid the prolonged impact from the COVID-19 outbreak, combined with low interest rates.

In a bid to jump-start the virus-hit economy, the BOK has conducted two rate cuts in less than three months since the country confirmed its first coronavirus case on Jan. 20, sending the policy rate to a record low of 0.5 percent.

But watchers said South Korean companies appear to be just sitting on ample cash without spending their money on productive activity.

Corporate loans rose by some 101 trillion won between January and May this year, while their savings also added 46.7 trillion won during the period, according to the data.

"Companies tend to secure more funds through loans or other means as business conditions become more uncertain," a BOK official said. "The central bank's easy monetary policy can become effective only when ample liquidity leads to investment." (Yonhap)