In the first quarter of this year, the household loan threshold is expected to be significantly lower than in the fourth quarter of last year. Corporations are still expected to be strict with loans, particularly for small and medium-sized enterprises facing increased credit risk, which will likely make borrowing even more difficult.
According to the results of the 'Survey on Lending Behavior of Financial Institutions' announced by the Bank of Korea on the 14th, the comprehensive index of banks' lending attitudes in the first quarter (-1) rose by 26 points compared to the previous quarter (-27). This indicates that the number of 'strengthen' opinions significantly decreased between the quarters, making them nearly equal to 'relax' opinions.
In this survey, the Bank of Korea calculated the lending attitude of financial institutions, demand for loans, and assessment of credit risk (greatly relaxed·increased - somewhat relaxed·increased - unchanged - somewhat strengthened·decreased - greatly strengthened·decreased) as a weighted average to yield an index between 100 and -100. A positive index (+) indicates that the number of financial institutions citing 'relaxation (lending attitude)' and 'increase (credit risk·loan demand)' is greater than those citing 'strengthening' and 'decrease'; a negative index (-) indicates the opposite.
When broken down by lending entities, the attitude index for household housing loans and household general loans (such as credit loans) was 6 and 3, respectively, switching from a clear strengthening advantage (-42·-39) in the fourth quarter of last year to a relaxation advantage. A Bank of Korea official noted, "Relaxation in household loan attitudes is expected, particularly in housing mortgage loans targeted at those needing financial stability and non-face-to-face credit loans."
The lending attitude towards corporations has still maintained a strengthening trend. The lending attitude index for large corporations and small and medium-sized enterprises was each -3. However, compared to the previous quarter (-11·-17), the extent of the negative impact has significantly decreased.
Among the lending entities, small and medium-sized enterprises displayed the highest credit risk index. In the first quarter, the projected credit risk index for small and medium-sized enterprises was 39, the highest since the fourth quarter of 2022 (39). This is a result of a significant increase in the loan delinquency rate, particularly among vulnerable sectors.
There has been a growing expectation that credit risk will increase for large corporations (11→28), small and medium-sized enterprises (33→39), and households (22→28). The comprehensive credit risk index expected by domestic banks for the first quarter was 34, up 6 points from the previous quarter (28). A Bank of Korea official analyzed, "Credit risk for corporations will remain high due to poor business conditions and worsening funding situations," and added, "Household credit risk will also be influenced by delays in income improvement and ongoing debt repayment burdens."
In the case of non-bank financial institutions such as savings banks, the survey indicated that the strengthening trend in lending attitudes for the first quarter would continue, and credit risk was expected to remain at a high level.
Meanwhile, this survey was conducted from November 26 to December 6 last year among the chief credit officers of 203 financial institutions (18 domestic banks, 26 mutual savings banks, 7 credit card companies, 10 life insurance companies, and 142 mutual financial cooperatives).