South Korean Banks to Keep Stricter Lending Protocols
(MENAFN) Financial institutions across South Korea are poised to maintain stricter lending protocols through year-end as authorities intensify their campaign against soaring consumer debt levels, fresh central bank data revealed Monday.
The Bank of Korea (BOK) reported its lending attitude index climbed to minus 14 for the fourth quarter, up from minus 28 in the July-September period, based on a September survey encompassing 203 banking entities and financial service providers.
However, the metric has remained in negative territory since April through June of this year. When the index falls below zero, it signals more lenders are restricting credit access than loosening requirements.
President Lee Jae-myung's administration, which assumed power in early June, has rolled out comprehensive policy initiatives targeting the nation's ballooning household liabilities, with particular emphasis on home financing.
The mortgage lending index surged from minus 53 during the third quarter to minus 28 for October-December, while indicators for alternative household credit products—including unsecured personal loans—jumped from minus 36 to minus 19.
Corporate lending conditions showed improvement, with the large enterprise index advancing from zero to 6 during the reporting window, and the small business metric rising from minus 6 to 3.
The BOK implemented two consecutive quarter-point rate reductions in February and May, bringing the benchmark to 2.50 percent, following similar cuts last October and November.
Credit risk assessment for consumer borrowers held steady at 22 in the fourth quarter versus the previous three-month span.
The risk index for major corporations remained flat at 11, though the small firm measurement declined from 33 in the third quarter to 28 in the final quarter.
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