Loans extended to companies in South Korea grew by the largest amount in three quarters in the first quarter of the year as loan demand by the service sector increased amid the pandemic, central bank data showed Wednesday.

The outstanding amount of corporate loans came to 1,435.8 trillion won ($1.3 trillion) at the end of March, up 42.1 trillion won from three months earlier, according to the data from the Bank of Korea (BOK).

The reading also marked the largest on-quarter gain since a 69.1 trillion-won increase in the second quarter of last year.

The increase in corporate loans came as the in-person service sector, including wholesale and retail segments, took more loans to cope with business slumps caused by a surge in COVID-19 cases.

In the January-March period, lending to the service industry grew 31.1 trillion won on-quarter to 911.8 trillion won.

Loans to manufacturing firms rebounded last quarter as they borrowed more money after repaying debts to improve their year-end balance sheet, according to the central bank.

Loans to the manufacturing industry, the backbone of the country's economy, amounted to 399.9 trillion won as of end-March, up 7.1 trillion won from three months earlier. (Yonhap)