The rise in loans extended to South Korea's local companies quickened its pace from three months earlier in the first quarter, central bank data showed Tuesday.

However, the increase in corporate loans for facilities slowed over the cited period, apparently reflecting sluggish investment by local firms.


Loans extended to local companies by banks and non-bank financial institutions here came to 959 trillion won ($806.2 billion) as of end-March, up 15.7 trillion won or 1.7 percent from the previous quarter, according to preliminary data from the Bank of Korea.

The increase marked acceleration from a 1.2 percent on-quarter gain in the previous quarter. From a year earlier, the Q1 tally marked a 6.6 percent rise.

Fresh loans extended to companies for operation gained 7.9 trillion won over the cited period, marking a turnaround from a 4.4 trillion won drop in the previous quarter and possibly indicating difficulties facing local firms due to sluggish exports and domestic consumption.

South Korea's exports have dropped every single month since the start of last year. Government data on May exports are due Wednesday.

While local companies borrowed more for operation, they borrowed less for investment in facilities and equipment.

In the January-March period, local banks and other financial institutions extended 7.8 trillion won in fresh loans to local companies for facilities. The amount more than halved from 15.9 trillion won in the previous quarter.

By industrial sector, loans to companies in the service sector spiked 9.3 percent on-year to 534.7 trillion won as of end-March, while loans extended to manufacturing firms came to 329.2 trillion won, up 4.2 percent from the same period last year.

Total borrowing by construction firms, on the other hand, slipped 2.7 percent on-year to 39.5 trillion won, the bank data showed. (Yonhap)