South Korean banks to maintain eased lending stance in Q3: report

There are less banks who will ease their lending stance compared to Q2 and Q1, however

Increasing demand for household loans is encouraging banks in South Korea to maintain their eased stance in lending this Q3.

In a poll of financial institutions–including 18 banks– conducted by the Bank of Korea (BOK), the index gauging banks’ attitudes toward lending to households and businesses stood at “5” for the July to September period, reports Yonhap News Agency. A reading above zero means that the number of lenders who plan to ease lending surpasses that of banks who will tighten lending.

Whilst more banks will ease lending attitudes, the portion is notably lower than the 6 score in Q2, and far lower than the score of 11 achieved in the Q1 poll.

ALSO READ: Korea eases rules on overseas ownership; insurers can acquire banks

The BOK reportedly said that banks have such an attitude toward lending as demand for household loans is expected to increase under eased lending criteria, Yonhap reported.

The poll also warned that credit risks for borrowers will likely mount in Q3 due to rising debt burden from high borrowing costs driven by the BOK's rate hikes to curb inflation.