SEOUL, July 13 (Yonhap) — Banks in South Korea will likely reduce their lending to local businesses and households in the third quarter due to the sluggish economy prompted by the new coronavirus pandemic, a central bank poll showed Monday.
In the quarterly survey conducted by the Bank of Korea (BOK), the index measuring the banks’ attitude toward fresh loans came to negative 11 for the July-September period, marking a sharp turnaround from 1 for the second quarter and 11 for the first three months of the year.’
Such a change apparently comes as the local lenders anticipate higher risks for all borrowers, including households.
They expected the credit risk of households to rise to 43 from 40 in the second quarter, with that of large businesses climbing to 27 from 23 over the cited period.
The credit risk of small and medium-sized firms is expected to stay at 43, unchanged from the April-June period, according to the BOK.