Seoul: The financial regulator said Monday credit loan growth is still manageable despite its recent spike in tandem with a stock market rally.

According to Yonhap News Agency, the Financial Services Commission (FSC) reported that non-mortgage household loans, including credit loans, had increased by 1.4 trillion won (US$959 million) from a month earlier, reaching 238 trillion won as of end-October. This marks a turnaround from the 500 billion-won decrease observed in the previous month.

Home-backed loans, conversely, rose by 2.1 trillion won to 934.8 trillion won during the same period, indicating a significant slowdown compared to the 3.9 trillion won increase in September.

The regulator noted that credit loans typically see a rise in October and November following summer vacations and holidays. However, the recent spike in credit loans is attributed to a growing number of investors securing loans to participate in the stock market rally.

FSC Chairman Lee Eog-weon emphasized the need for proper risk management last week, amid the increasing trend of investors taking out loans for stock investments. He reassured that the recent surge in credit loans does not pose a significant threat to overall financial stability.

The FSC reiterated its call for individuals to be more cautious in managing their financial risks and pledged to closely monitor credit loan growth. For the first 10 months of the year, credit loans extended by all financial institutions declined by 2 trillion won, according to the regulator.

South Korean stocks have been among the world's best performers this year, bolstered by government-led market reform measures and optimism over the artificial intelligence (AI) boom.