BOK survey shows banks expect to keep lending tight in Q4

Korean banks are expected to maintain tight lending standards for households and businesses in the fourth quarter amid growing concerns over credit risks, a central bank survey showed Monday.

The index gauging banks' lending attitudes stood at minus 11 for the October-December period, improving from minus 20 in the previous quarter, according to the survey of 203 financial institutions, including 18 banks, conducted by the Bank of Korea (BOK).

A reading below zero indicates that a majority of lenders plan to tighten lending standards.

The index of banks' lending attitudes has remained in negative territory for seven consecutive quarters since the second quarter of 2025, as financial authorities have tightened regulations on household lending since late 2024 to rein in surging household debt and rising housing prices in the greater Seoul area.

Banks are expected to tighten lending standards for nonmortgage household loans while keeping their standards for mortgage loans unchanged, the BOK said.

Lending standards for both large corporations and small- and medium-sized enterprises are projected to tighten from the previous quarter, the BOK added.

Credit risks among both households and businesses are expected to increase in the fourth quarter amid rising delinquency rates.

The survey also showed that demand for household mortgage loans and non-mortgage loans will likely increase in the fourth quarter from three months earlier, while demand for corporate loans is projected to remain nearly flat.

Yonhap