South Korea’s Five Biggest Banks Near Household Lending Limits, Raising Second-Half Credit Crunch Risk

South Korean financial regulators set a strict 1.5% annual cap on household loan growth across the country’s financial sector at the start of 2026 to curb persistently high household debt. Yet loan demand has continued to swell, fueled both by retail investors borrowing to buy shares amid a strong rally in South Korean stocks and by underlying homebuying demand in the property market. If banks are forced to tighten credit in the second half, the move could severely undermine liquidity-driven momentum in the country’s stock market and significantly increase default and credit risks across financial markets.

By the end of June 2026, South Korea’s five largest commercial banks — KB Kookmin, Shinhan, Hana, Woori and NH NongHyup — had used 85.3% of their full-year household loan growth allowance. The banks have consequently been forced to tighten lending in the second half to comply with the regulatory target. KB Kookmin Bank, for example, sharply cut its home-purchase loan ceiling in the Greater Seoul area from 600 million won to 300 million won and reduced unsecured credit limits, leaving the credit market facing a severe liquidity squeeze in the second half.