Banks foresee tighter lending standards in Q4 2026
Domestic banks anticipate tighter lending standards and rising corporate and household credit risks in Q4 2026, according to the Bank of Korea's October 26 survey release. Non-bank lenders also anticipate continued tightening.
Mortgage demand outpaces corporate borrowing
Banks' Q4 lending-standards indexes stand at -8 for large corporations, -19 for small and medium-sized enterprises, 0 for household mortgages and -8 for other household loans.
Negative readings indicate tightening; zero indicates no change.
Credit-risk indexes are 6 for large corporations, 31 for smaller firms and 28 for households, indicating anticipated increases.
Loan-demand indexes are 3, 0, 14 and 3, respectively.
Banks anticipate broadly unchanged corporate demand and rising household demand, mainly for mortgages.
Domestic bank loan balances totaled KRW 2,545 trillion at the end of June 2026.
The survey distinguishes Q3 developments from Q4 expectations rather than reporting realized Q4 lending.
Non-bank demand splits by sector
For mutual savings banks, mutual credit cooperatives, credit card companies and life insurers, Q4 lending-standards indexes are -10, -31, 0 and -3, respectively.
Credit-risk indexes are 17, 40, 0 and 20; loan-demand indexes are 6, -2, -29 and 14. Demand therefore increases at savings banks and life insurers but decreases at cooperatives and card companies.
Non-bank loan balances totaled KRW 933 trillion at the end of June 2026.
The survey anticipates rising credit risks across most non-bank sectors, with card companies reporting no change.
Expectations are not loan flows
The September 2–16 survey covered 203 institutions, including 18 domestic banks and three internet-only banks.
Response rates were 100 percent except at mutual credit cooperatives, where 130 of 142 responded, or 92 percent.
Its -100 to +100 indexes measure weighted officer responses, not lending volumes.
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