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S. Korean banks expect credit risk to rise in Q3

SEOUL
2023-07-19 12:12

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SEOUL, July 19 (Xinhua) -- South Korean banks expected credit risk of loans to households and small companies to rise in the third quarter amid higher borrowing costs, a central bank poll showed on Wednesday.

The credit risk index for banks' household and corporate loans stood at 36 for the July-September quarter, up 2 points from the previous quarter, according to the Bank of Korea (BOK) survey of 18 banks between May 31 and June 16.

Higher interest rates expanded credit risks, especially for households and small companies.

The BOK had left its key rate unchanged at 3.50 percent since January after raising it by 3.0 percentage points for the past one and a half years.

The figures for households and small companies rose 3 points over the quarter to 36, while the reading for big corporations was unchanged at 14.

The deferred loan repayment for small firms and microbusiness owners hit by the COVID-19 pandemic was set to end by the end of September, raising expectations for higher loan delinquency.
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