South Korean banks expected to tighten lending standard in Q4

SEOUL (XINHUA) – South Korean banks are expected to tighten lending standard in the fourth quarter amid the lingering economic uncertainty from the COVID-19 pandemic, central bank survey showed yesterday.

The lending attitude index recorded minus five in the fourth quarter, down from zero in the third quarter, according to the Bank of Korea (BOK).

The reading below zero indicates that lenders plan to tighten lending standard.

The results were based on a survey of 17 local banks and other domestic lenders conducted from September 14 to 25.

The index for small companies tumbled from 12 in the third quarter to minus three in the fourth quarter, but the figure for big corporations was unchanged at minus three.

The reading for mortgage loan to households rose from minus 18 to minus six in the cited period, but the index for credit loan to households plunged from nine to minus nine in the period.

The credit risk index remained in a relative high level of 24 in the fourth quarter. It was down from 31 tallied in the third quarter.

The COVID-19 pandemic is expected to weaken corporate profitability and household income, the BOK said.

A bank employee counts South Korean won banknotes at a bank in Seoul. PHOTO: AFP