S.Korean financial institutions expect credit risk to rise in Q3

2021-07-12 15:51

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SEOUL, July 12 (Xinhua) -- South Korean financial institutions expected credit risk to rise in the third quarter due to the expected policy rate hike later this year, central bank data showed Monday.

The credit risk index stood at 18 for the July-September quarter, up eight points from the previous quarter, according to the Bank of Korea (BOK).

It was based on a survey of 201 financial institutions, including banks, savings banks and other lenders, conducted from June 14 to June 25.

The expected increase in credit risk came as the BOK indicated an interest rate hike later this year. The central bank has left its key rate unchanged at an all-time low of 0.50 percent since May last year.

Some of market watchers predicted a rate hike by 25 basis points as early as October, before raising it further by a quarter percentage point early next year.

The credit risk index for households gained to 18 for the third quarter from 6 in the previous quarter, but the index for small companies declined from 18 to 15 in the cited period. The index for big corporations retreated from 6 to minus 3 in the quarter.

The lending attitude index for banks came in at minus 3 for the third quarter, down from 7 in the previous quarter.

It meant that banks, which plan to tighten lending standard, outnumbered those planning to ease the standard.
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