(LEAD) Banks to ease lending to households and businesses in second quarter: survey

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(ATTN: ADDS Credit Risk Projections in last 3 paragraphs)

SEOUL, April 11 (Yonhap) — South Korean banks are likely to ease their standards for lending to households and businesses in the second quarter, as the government is expected to ease restrictions tough on loans, an investigation revealed on Monday.

According to the survey conducted by the Bank of Korea (BOK) among managers in charge of credit affairs in financial institutions, including 18 banks, the index assessing the bank’s attitude towards home and non-home secured loans. guaranteed to households stood at 11 and 3, respectively, for the April-June period.

The numbers compared to minus 14 and minus 17 matched a quarter earlier.

The index measuring banks’ lending policy for large and small businesses stood at 6 each for the second quarter, up from zero three months earlier, according to the survey.

A reading below zero means the number of lenders who will restrict lending exceeds the number of banks planning to ease lending criteria. A reading above zero means the opposite.

The BOK said demand for new loans from households will increase as banks are set to ease restrictions on loans. Demand for business loans is also expected to increase as companies seek additional liquidity amid growing uncertainty at home and abroad.

President-elect Yoon Suk-yeol’s new government, which will take office on May 10, has stressed the need to ease lending rules that had been tightened under the current administration of Moon Jae-in to limit rapid growth. of household debt.

Household debt has increased in recent years as people took out loans to ride out the pandemic and bought homes amid soaring prices.

As the BOK has raised its key rate at a rapid pace in recent months to contain inflation, concerns are growing about the increased financial burden on heavily indebted households and businesses.

Banks remain concerned about the possibility of credit risks rising in the second quarter amid rising borrowing costs and economic uncertainty.

The index measuring credit risk fell from 12 to 13 during the cited period, according to the data.

“Due to rising lending rates and continued uncertainty over economic conditions at home and abroad, credit risks for both households and businesses are expected to increase,” the BOK said.

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