Banks Expected to Maintain Tight Lending Standards in Q4: BOK Survey
A recent survey by the Bank of Korea indicates that South Korean banks will likely keep their lending standards stringent in the fourth quarter.
A recent survey by the Bank of Korea indicates that South Korean banks will likely keep their lending standards stringent in the fourth quarter.
According to a survey conducted by the Bank of Korea (BOK), South Korean banks are anticipated to uphold strict lending standards for both households and businesses in the fourth quarter of 2026. The survey, which included responses from 203 financial institutions, revealed a lending attitude index of minus 11 for the October-December period, showing an improvement from minus 203 in the previous quarter.
A reading below zero suggests that a majority of banks intend to tighten their lending criteria. This trend has persisted for seven consecutive quarters, primarily due to regulatory measures aimed at controlling household debt and rising housing prices in the Seoul area.
The BOK noted that banks are likely to impose stricter standards on non-mortgage household loans, while maintaining current standards for mortgage loans. Additionally, lending criteria for large corporations and small to medium-sized enterprises (SMEs) are expected to become more stringent compared to the previous quarter.
As delinquency rates rise, credit risks for both households and businesses are projected to increase in the upcoming quarter. The survey also indicated that demand for household mortgage and non-mortgage loans is expected to rise, while corporate loan demand is likely to remain stable.
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