emirates7 - Banks in South Korea are anticipated to tighten their lending standards for both households and businesses in the second quarter of 2025, according to a survey released Tuesday by the Bank of Korea (BOK).
The lending attitude index, which reflects banks' willingness to offer loans, dropped to minus six for the April-June period, down from seven in the previous quarter. The survey, which included 203 financial institutions—among them 18 banks—indicates that a reading below zero suggests most lenders are planning to adopt stricter loan criteria.
The central bank's findings suggest that credit risks are expected to stay elevated in the second quarter, largely due to persistent household debt and ongoing economic uncertainty.
Since the latter half of 2024, major banks have been tightening their lending policies in response to government efforts to curb the rapid growth in household borrowing and surging home prices in Seoul and its neighboring areas.
Despite these measures, household loans issued by Korean banks increased for the second straight month in March. This rise was driven in part by a rebound in property prices in Seoul’s upscale southern districts, following government efforts to ease housing market regulations.
According to the BOK, household loans held by banks rose by 1.4 trillion won (approximately US$985 million) in March compared to the previous month.
The lending attitude index, which reflects banks' willingness to offer loans, dropped to minus six for the April-June period, down from seven in the previous quarter. The survey, which included 203 financial institutions—among them 18 banks—indicates that a reading below zero suggests most lenders are planning to adopt stricter loan criteria.
The central bank's findings suggest that credit risks are expected to stay elevated in the second quarter, largely due to persistent household debt and ongoing economic uncertainty.
Since the latter half of 2024, major banks have been tightening their lending policies in response to government efforts to curb the rapid growth in household borrowing and surging home prices in Seoul and its neighboring areas.
Despite these measures, household loans issued by Korean banks increased for the second straight month in March. This rise was driven in part by a rebound in property prices in Seoul’s upscale southern districts, following government efforts to ease housing market regulations.
According to the BOK, household loans held by banks rose by 1.4 trillion won (approximately US$985 million) in March compared to the previous month.