Central bank loan issuance soars

The total number of loans by the Bank of Korea hit the highest level in 21 years in February, as more loans were approved to local companies for facility investment, data showed Wednesday.

Loans provided through BOK’s money issuance reached 15.4 trillion won ($13.9 billion) as of the end of February, up 66.5 percent from a year ago, according to the BOK report.

The level of loan issuance marks the highest since July 1994 when it reached 15.6 trillion won, excluding inflationary factors. Since then, the BOK’s loan issuance has stayed below 15 trillion won, with one exception in February 1999.

The sharp increase in the BOK’s loan issuance came partly due to the bank’s effort to support companies amid the decline in tax revenues.

Despite criticism that the central bank should have been more conservative in giving out loans to corporate borrowers, the BOK raised the ceiling of its loan facility to 20 trillion won from 15 trillion won in late March.

In addition, the BOK extended lending for small- and medium-sized firms and cut rates on certain loan plans to encourage corporate facility investment.

Before the March announcement, the central bank had set the ceiling at 15 trillion won from July.

By Chung Joo-won (joowonc@heraldcorp.com)