S.Korean financial institutions to tighten loan standard for households in Q1

Source: Xinhua| 2019-01-07 12:10:48|Editor: Liangyu
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SEOUL, Jan. 7 (Xinhua) -- South Korean financial institutions are expected to maintain a tightened loan standard for households in the first quarter of this year on expectations for higher borrowing costs, a central bank survey showed on Monday.

According to the Bank of Korea (BOK)'s poll of 199 financial institutions, the lending attitude index stood at minus 8 for the January-March quarter. The survey was conducted from Nov. 26 to Dec. 14.

The reading was up from minus 18 for the fourth quarter of last year, but it continued to stay below zero, indicating financial institutions planning to tighten loan standard rather than moderate it.

The tightened standard came as the government introduced a new measure in October to control household debts, which kept a record-breaking trend for the past years.

Expectations ran high for higher borrowing costs as the BOK hiked its benchmark interest rate in November to 1.75 percent from 1.50 percent. Debt-servicing burden for households was forecast to be heavier going forward.

The lending attitude index for household mortgage loans came in at minus 20 for the first quarter, with the figure for credit loans to households standing at minus 13.

The reading for loans to big corporations was changed at zero, while the index for loans to small firms making no change at minus 3.

Credit risk for loans, extended by financial institutions, gained to 22 in the first quarter from 15 in the fourth quarter of last year.

Credit risk for household loans jumped from 10 to 20 in the cited period, while the risks for loans to big and small companies were changed at 3 and 27, respectively.