South Korean banks’ household loans fell for the first time in eight months in September as lenders joined the regulator’s move to curb growing household debt, industry data showed Monday.

Household loans extended by top lender Kookmin Bank and three other major banks amounted to 276.9 trillion won ($234.9 billion) as of Sept. 29, down 91 billion won from the end of August, according to the data.

The September report marked the first monthly fall since January, when banks’ household loans declined by 474 billion won.

The decline in bank home loans came as local banks scurried to curtail household loans, mostly credit loans, in a bid to meet an advised target by the Financial Services Commission of a 0.6 percent monthly loan growth.

Credit loans declined by 1.8 trillion won on-month to 57.3 trillion won last month, the largest monthly fall since December 2008, according to data.

South Korea is grappling with growing household debt, which reached 876.3 trillion won as of the end of June. Households’ high indebtedness is feared to be a major constraint on economic growth by limiting domestic demand.

The regulator announced steps to stem household debt in June, but the growth of household debt accelerated in July and August, prompting the watchdog to give a strong warning to banks. Several banks halted the extension of fresh home loans in August.

In an effort to make up for that lost income stream, local banks expanded their lending to large companies, the data showed.

Lending to large firms stood at 60.2 trillion won as of Sept. 29, up 2.25 trillion won from the end of August. Loans by major banks to smaller companies fell by 325.2 billion won on-month to 208.1 trillion won. 

(Yonhap News)