The Bank of Korea has published its loan officer survey, showing that domestic banks and nonbank financial institutions generally expect tighter lending standards and increased credit risks in the fourth quarter of 2026. Banks expect corporate loan demand to remain broadly stable and household demand to rise, mainly through mortgages. Demand expectations vary across nonbank sectors. Domestic banks expect to tighten standards for large corporations and small and medium enterprises, with lending standards indexes of -8 and -19, respectively. Negative readings indicate tightening. Mortgage lending standards are expected to remain unchanged after tightening in the third quarter, while standards for other household loans are expected to tighten less sharply. Credit risks are expected to increase for both corporations and households, with the household credit risk index at 28, compared with 19 in the third quarter. Among nonbank lenders, mutual savings banks, mutual credit cooperatives and life insurance companies expect further tightening, while credit card companies anticipate unchanged standards. Mutual credit cooperatives’ credit risk index is expected to rise to 40 from 36, while credit card companies expect no change in credit risk. Loan demand is expected to increase at mutual savings banks and life insurance companies but decline at mutual credit cooperatives and credit card companies.
Bank of Korea survey points to tighter lending standards and rising credit risks in fourth quarter of 2026
The Bank of Korea’s latest loan officer survey indicates that banks and nonbank lenders generally expect tighter lending standards and rising credit risks in the fourth quarter of 2026. Banks anticipate broadly stable corporate loan demand and stronger household demand, mainly for mortgages, although mortgage lending standards are expected to remain unchanged. Nonbank loan demand is expected to rise at mutual savings banks and life insurance companies but fall at mutual credit cooperatives and credit card companies.