Seoul, Dec 5 (IANS) Loans extended to companies in South Korea grew at a faster pace in the third quarter compared with the previous quarter, driven by strong demand from the service sector, though the construction and real estate fields suffered a prolonged downturn, central bank data showed on Friday.

Outstanding loans to local companies reached 2,014.1 trillion won ($1.37 trillion) as of end-September, up 20.2 trillion won from three months earlier, according to data from the Bank of Korea (BOK), reports Yonhap news agency.

The increase marked an acceleration from the previous quarter, when loans expanded by 14.5 trillion won amid a sluggish construction industry.

By sector, loans to manufacturing firms rose by 4.1 trillion won from three months earlier to 501.5 trillion won as of end-September.

Loans in the service sector surged by 15.7 trillion won to 1,284.4 trillion won, though outstanding loans to the real estate sector declined for the third consecutive quarter to 468.6 trillion won.

It marked the first time since the BOK began compiling the relevant data in 2008 that the real estate sector has recorded three consecutive quarterly declines in loans.

Loans in the construction sector shrank by 1.0 trillion won to 102.8 trillion won, marking the fifth straight quarterly decline.

“The decline in real estate loans was due to the write-offs and sales of non-performing loans as part of industry restructuring stemming from the prolonged downturn in the property market in non-capital areas,” Kim Min-soo, chief of the BOK’s financial statistics team, said.

By purpose, operating funds increased by 13.6 trillion won in the third quarter, following an 8.8 trillion-won gain in the second quarter.

Facility investment loans advanced by 6.6 trillion won, picking up the pace from a 5.7 trillion-won increase in the previous quarter, the data showed.

–IANS

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