Bank of Korea survey shows banks and most non-banks expect tighter lending standards and higher credit risk in Q3 2026

The Bank of Korea published its latest Loan Officer Survey on Financial Institution Lending, covering Q2 2026 developments and the Q3 2026 outlook across 203 financial institutions. The survey indicates that domestic banks expect to tighten lending standards in the third quarter, mainly on household loans, while non-bank financial institutions in all sectors except credit card companies also expect tighter standards. Credit risks are expected to increase for both corporates and households at banks and across all non-bank sectors, while loan demand is expected to diverge by borrower and institution type. For domestic banks, the Q3 lending standards index is unchanged at 0 for large corporations and small and medium-sized enterprises, but remains negative for household mortgages at -11 and other household loans at -14, indicating further tightening. Bank credit risk is expected to stay elevated across all categories, with indexes of 8 for large corporations, 25 for SMEs and 19 for households. Loan demand is expected to rise for corporate credit, with indexes of 6 for large corporations and 25 for SMEs, and for other household loans at 14, while household mortgage demand is expected to fall to -6. Among non-banks, lending standards are expected to tighten at mutual savings banks, mutual credit cooperatives and life insurance companies, while credit card companies expect no change. Credit risk is expected to increase in all four sectors, and loan demand is expected to increase at mutual savings banks and life insurance companies but decrease at mutual credit cooperatives and credit card companies.