SEOUL, June 2 (Yonhap) — Loans extended to companies in South Korea jumped at the fastest rate in more than 10 years in the first quarter, central bank data showed Tuesday, apparently on a rise in demand from businesses hit by the fallout from the new coronavirus pandemic.

The outstanding amount of corporate loans came to 1,259.2 trillion won (US$1.03 trillion) at end-March, up 51.4 trillion won from three months earlier, according to preliminary data from the Bank of Korea (BOK).

The reading marks the largest on-quarter increase since the first quarter of 2008.

“The rise in loans extended to businesses in both the service and manufacturing sectors greatly accelerated from that of the previous quarter, while the debt extended to construction firms also increased, marking a turnaround from a negative growth in the previous quarter,” the BOK said.

In the January-March period, loans extended to the service sector added 34 trillion won, accelerating from a 22.7 trillion-won increase in the previous quarter.

Loans to manufacturing firms added 14.8 trillion won, up from a 100 billion-won rise three months earlier.

Such a sharp increase in corporate debt was largely attributed to sluggish demands at home and abroad due to the COVID-19 pandemic, leading to reduced sales and possibly leaving many businesses facing a liquidity crunch.

The BOK earlier said bank loans extended to local companies again surged at a record high amount of 27.9 trillion won in April.

Business conditions for the companies are believed to have somewhat improved since, with the local government pledging a 250 trillion-won aid package.