Non-financial corporations held a record 20.8 trillion won ($13.6 billion) in surplus funds in the first quarter of this year, driven by a sharp rise in net profit fueled by the semiconductor boom.
According to the Bank of Korea's preliminary first-quarter 2026 fund flow statistics released Tuesday, the net financial asset position of the domestic sector expanded sharply to 84.3 trillion won, up from 51.9 trillion won in the fourth quarter of last year.
Net financial asset position refers to the difference between financial asset transactions — funds deployed — and financial liability transactions — funds raised — and serves as an indicator of how much surplus cash a sector holds.
Among the sectors, non-financial corporations posted a net financial asset position of 20.8 trillion won, a dramatic increase from just 100 billion won in the fourth quarter of last year. It is the largest figure since the statistics were first compiled in 2009, surpassing the previous record of 5.8 trillion won set in the first quarter of 2024. The surge was driven by a sharp rise in corporate net profit on the back of a strong semiconductor cycle.
"Non-financial corporations are typically net borrowers — they generally spend more on physical investment in equipment and technology for goods and service production than they earn from financial activities," said Kim Yong-hyun, head of the Bank of Korea's fund flow team. "But this quarter, a sharp jump in operating profit driven by the semiconductor boom generated a large surplus of cash at non-financial firms."
Funds deployed by non-financial corporations — centered on trade credit and direct investment — surged from 58.4 trillion won in the fourth quarter of last year to 137 trillion won in the first quarter of this year. Funds raised, primarily through borrowing from financial institutions and trade credit, also rose from 58.3 trillion won to 116.2 trillion won.
The net financial asset position of households — including sole proprietors — and nonprofit organizations also expanded, from 67 trillion won in the fourth quarter of last year to 79.2 trillion won in the first quarter of this year. Income rose on the back of year-opening bonus payments, while surplus funds increased as the volume of new apartment move-ins declined.
Households typically maintain a positive net financial asset position, channeling surplus funds into deposits and investments to supply capital to corporations and the government, which generally run net deficits.
Gross funds deployed by households in the first quarter — before accounting for funds raised — totaled 96.3 trillion won, up from 84.3 trillion won the previous quarter.
Particularly notable was a sharp increase in equity securities and investment fund activity, which rose from 34 trillion won to 61.4 trillion won, while deposits at financial institutions also grew from 12.8 trillion won to 29.4 trillion won.
Much of the increase in financial institution deposits was attributable to a rise in securities deposit accounts.
"Bank deposits fell sharply while stock deposit accounts increased significantly — a money move into equities," Kim said.
Total funds raised by households in the first quarter came to 17.1 trillion won, slightly down from 17.3 trillion won in the fourth quarter of last year, largely because borrowing from financial institutions fell from 18 trillion won to 16 trillion won.
The ratio of household debt to nominal gross domestic product at the end of the first quarter stood at 85.3 percent, down 2.9 percentage points from 88.1 percent in the fourth quarter of last year.
"Household debt grew about 0.6 percent this quarter, restrained by the government's household loan regulations and tighter loan management by banks," Kim said. "Because nominal GDP grew about 4 percent quarter-on-quarter in the first quarter of this year, the household debt ratio fell sharply."
He added that if household debt continues to be well managed and nominal GDP growth exceeds 10 percent this year, the ratio could fall considerably further toward the government's target of below 80 percent.
The net borrowing position of the general government widened from 19 trillion won to 23.3 trillion won, as rapid fiscal spending pushed expenditures above revenues.
The net borrowing position of the overseas sector reached 84.3 trillion won, the largest since the statistics were first compiled in 2009, surpassing the previous record of 53.3 trillion won set in the third quarter of last year. The increase was driven in part by a widening current account surplus.
"The overseas sector's net borrowing position was also influenced by growth in the balance of payments as exports increased, and a significant portion of that appears to reflect the rise in semiconductor exports," Kim said.
kimstar@heraldcorp.com
