▲ This photo, taken July 18, 2023, shows signs on a bank's loan programs that were put up on the exterior of a lender in Seoul. (Yonhap)

bank loans-Q3 survey

Banks to keep eased stance on extending loans in Q3 on softened curbs

SEOUL, July 19 (Yonhap) -- Banks in South Korea are expected to maintain an eased stance on extending loans in the third quarter of the year amid softened lending curbs, a central bank survey showed Wednesday.

According to the poll of financial institutions, including 18 banks, conducted by the Bank of Korea (BOK), the index gauging banks' attitude toward lending to households and businesses stood at 5 for the July-September period.

The figure compares with 6 the previous quarter and 11 during the first quarter of the year.

A reading above zero means the number of lenders that will ease lending surpasses that of banks planning to tighten lending criteria.

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

The poll, however, said the credit risks for borrowers in the third quarter will likely mount due to rising debt burden from high borrowing costs driven by the BOK's rate hikes to curb inflation.

The index gauging credit risks for households and businesses rose to 36 in the third quarter of this year from the previous quarter's 34.

Last week, South Korea's central bank kept its key interest rate unchanged at 3.5 percent.

It marked the fourth straight time the BOK has stood pat following rate freezes in February, April and May. The rate freezes came after the BOK delivered seven consecutive rate hikes from April 2022 to January 2023.

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