South Korea’s financial markets showed mixed trends in January, with corporate lending rebounding while household borrowing remained sluggish, according to the Bank of Korea (BOK) on Wednesday. Large corporate loans surged $4.2 billion (6.1 trillion won), reversing December’s sharp contraction, as companies tapped fresh credit following year-end balance sheet adjustments and seasonal financing needs. Small- and medium-sized enterprise (SME) lending also rose by $1.2 billion (1.8 trillion won), driven by tax payments and holiday-related expenses. However, household borrowing declined for a second straight month, with overall loans falling $344 million (500 billion won) despite a modest pickup in mortgage lending.

Liquidity conditions also diverged. Bank deposits plummeted $22.9 billion (33.3 trillion won), as corporate funds parked for regulatory compliance flowed out and businesses met VAT obligations. Meanwhile, investment funds saw sharp inflows, with Money Market Funds (MMF) rebounding $13.7 billion (19.9 trillion won) after December withdrawals. Bond funds also turned positive by $5.9 billion (8.6 trillion won), reflecting a shift toward safer assets amid market uncertainty. The BOK noted that while market rates initially declined on domestic slowdown concerns, expectations of a delayed U.S. rate cut kept bond yields from falling further.