Bank of Korea, Q3 Financial Institutions Loan Attitude Survey Result
Prediction of tighter loan regulations in Q4… Banks increase caution
Loans to large corporations to become more difficult… Eased for SMEs due to policy support, ‘[This is Jang Young-eun from E-Daily] As the special management of household loans, focusing on mortgage loans, continues until the end of the year, buying a house with borrowed money is expected to face considerable difficulties. This is because financial authorities have expressed a firm commitment to curb the surge in household loans, and commercial banks are joining in. ‘,
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, ‘According to the ‘Financial Institutions Loan Attitude Survey Result’ released by the Bank of Korea on the 23rd, domestic banks’ loan attitudes are expected to be somewhat relaxed for SMEs but strengthened for households, focusing on mortgage loans, in the fourth quarter. The loan attitude of non-bank financial institutions is expected to remain generally tightened. Strengthening loan attitudes means taking a conservative approach in loan operations, such as raising interest rates or tightening examinations. ‘,
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, ‘Domestic banks are showing a tendency to strengthen their loan attitudes more for households and large corporations. The sentiment is to scrutinize not only residential loans, including mortgages and jeonse loans but also general loans. The ongoing household debt management policy and the expanded application of the stress-based debt service ratio (DSR) to include credit loans since last month are influencing this. ‘,
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, ‘The strengthening of loan attitudes towards the household sector has been evident since the second quarter. The loan attitude index for general household loans, such as credit loans, has been in the negative since the first quarter, while the household mortgage loan index dropped from a positive in the first quarter to -6 in the second quarter, -22 in the third quarter, and is projected at -28 for the fourth quarter. A negative value in the loan attitude index indicates a tightening of loan evaluations, making it more difficult to get a loan, while a positive value suggests the opposite. ‘,
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, ‘It appears that large corporations will also find it more challenging to borrow money from banks. Banks have indicated that they will enhance loan examinations for large corporations as part of risk management amid internal and external uncertainties. The loan attitude towards large corporations is expected to turn negative (indicating a tightening) for the first time this year in the fourth quarter. ‘,
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, ‘On the other hand, there was a higher response rate indicating that the loan attitude would be somewhat relaxed for SMEs due to strengthened policy support. ‘,
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, ‘The non-bank financial sector’s stance was not much different. Excluding credit card companies, most sectors are expected to maintain a tightened loan attitude. A Bank of Korea official noted, “This seems to be aimed at managing asset soundness due to the continuation of high delinquency rates,” and added, “The credit risk of non-bank financial institutions is expected to remain high across most sectors in the fourth quarter.” ‘,
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, ‘Domestic banks judged that loan demand will increase, mainly from SMEs and households, in the fourth quarter. SMEs are expected to increase due to the need for working capital and liquidity, while households are seen to focus on credit loans for living expenses. ‘,
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, ‘Meanwhile, the credit risk of companies in the fourth quarter is forecasted to remain high due to sluggish business conditions centered on SMEs, and the household sector is expected to maintain a cautious stance regarding credit risk due to delayed improvements in income conditions.’,
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