SEOUL, April 12 (Yonhap) — Banks in South Korea are expected to tighten their lending to households and big companies in the second quarter of this year, as credit risks will remain high amid the pandemic, a central bank poll showed Monday.
The Bank of Korea’s index measuring the banks’ attitude toward fresh loans came to minus 2 for the second quarter.
The lower the reading, the more likely banks will tighten their restrictions on lending. A reading below zero means that the number of lenders that will restrict lending surpasses that of banks planning to ease lending criteria.
In the second quarter, it is forecast that domestic banks will moderately tighten their standards on loans, especially to households and big firms, the BOK said in a statement.
Local lenders expected credit risks of households and local businesses, or the likelihood of borrowers being unable to repay debt, to stay at a high level in the second quarter, the BOK said.
The indicator measuring households’ credit risks reached 26 in the current quarter, up from 13 three months ago.
However, banks are expected to provide more liquidity to smaller firms as the pandemic dealt a heavy blow to their businesses, the BOK said.