This photo shows ATMs installed in Seoul, Jan. 12. Yonhap
Korean banks are expected to somewhat loosen their criteria on extending loans to households and companies in the first quarter of 2025, following months of tightening, a survey by the central bank showed Tuesday.
The index gauging banks’ attitude toward lending stood at minus 1 for the January-March period, sharply up from minus 27 for the previous quarter, according to the poll of 203 financial institutions, including 18 banks, conducted by the Bank of Korea (BOK).
A reading below zero means that a majority of lenders will tighten lending standards.
Credit risks for borrowers, however, will likely remain high in the first quarter due mainly to still-high household debts and economic uncertainties, the poll showed.
Major lenders have tightened lending rules since the second half of 2024 as financial authorities have pressed them to do so to rein in surging household lending and rising housing prices in Seoul and some of its surrounding regions.
“Demand for fresh loans is projected to increase, particularly from companies given unfavorable business circumstances,” a BOK official said. “Banks are likely to ease lending rules for those who seek funds for living and businesses.”
As of end-November, banks’ outstanding household loans had stood at 1,141.4 trillion won (779.81 billion), up 1.9 trillion won from a month earlier.
The amount of fresh loans rose for an eighth consecutive month, though it logged the slowest on-month growth since March amid tightening regulations.
Corporate loans had gained 2.2 trillion won from a month earlier to 1,326.6 trillion won as of end-November, logging a slower increase compared with the previous month’s 8.1 trillion-won rise, government data showed. (Yonhap)
