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Korean banks cautious on lending

Korean banks cautious on lending

(9 July 2012 – South Korea) More lending caution is expected as Korea’s banks feel the pinch of economic uncertainty at home and abroad. The Bank of Korea (BOK) published its index gauging lending attitudes of 16 local banks; it showed lending attitudes reached three for the July-September period, compared with seven tallied in the second quarter.

Third-quarter data marked the lowest level since the index came in at minus four in the fourth quarter of2009, it added.

Local banks expect credit risks of households and companies to rise further in the third quarter on concerns that weak domestic demand will hurt smaller firms’ profitability and household debt is on the rise, the BOK said.

An index measuring their credit risks, or the likelihood of borrowers being unable to repay debt, came in at 38 for the current quarter, up from 24 recorded three months earlier.

The figure marked the highest level since the index reached an identical 38 in the first quarter of 2009 when the country was in the midst of the global financial crisis, it added.
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