Home   >   Business   >   Banks to maintain tightened lending criteria in Q4: survey

Banks to maintain tightened lending criteria in Q4: survey

October 23, 2024

Banks in South Korea are expected to continue to tighten their stances on extending loans in the fourth quarter of the year, a central bank survey showed Wednesday.

According to the poll of financial institutions, including 18 banks, conducted by the Bank of Korea (BOK), the index gauging banks’ attitude toward lending home mortgages stood at minus 12 for the October-December period.

The figure compares with minus 17 for the previous quarter and minus 6 for the second quarter.

A reading below zero means that a large number of lenders will tighten lending standards.

The poll also showed the credit risks for borrowers in the fourth quarter will likely remain high due to high household debts.

Earlier this month, the BOK cut its key interest rate by a quarter percentage point to 3.25 percent, ending its yearslong restrictive policy amid moderating inflation and faltering domestic demand.

But concerns linger over still-high household debts.

The central bank has been implementing a restrictive mode as it delivered seven consecutive hikes in borrowing costs from April 2022 to January 2023 to tame soaring inflation in Asia’s fourth-largest economy.

This file photo, taken July 18, 2023, shows information on a bank's loan programs on the exterior of a lender in Seoul. (Yonhap)
This file photo, taken July 18, 2023, shows information on a bank’s loan programs on the exterior of a lender in Seoul. (Yonhap)