The Bank of Korea published its Loan Officer Survey on Financial Institution Lending covering Q1 2026 developments and the outlook for April to June 2026. Domestic banks expect to somewhat tighten lending standards in Q2, especially for household credit, and non-bank financial institutions anticipate tightening across all surveyed sectors. Credit risk is expected to rise for both corporate and household borrowers, while banks see stronger demand for corporate loans but weaker demand for household mortgages. In the Q2 outlook, domestic banks’ lending standards indices were 3 for large corporations and 0 for small and medium-sized enterprises, versus -8 for household mortgages and -3 for other household loans, with credit risk indices of 25, 36, 19 and 19 respectively. Loan demand indices pointed to higher demand for corporate credit (14 for large corporations and 28 for SMEs) and lower demand for household mortgages (-3). Among non-banks, lending standards indices were negative across mutual savings banks (-10), mutual credit cooperatives (-32), credit card companies (-7) and life insurers (-11); credit risk increased in all but life insurance (-2), and loan demand strengthened except at mutual credit cooperatives (-7).
Bank of Korea 2026-04-21
Bank of Korea loan officer survey signals broad tightening in lending standards and higher credit risk in Q2 2026
The Bank of Korea’s Q1 2026 Loan Officer Survey indicates that domestic banks and non-bank financial institutions expect tighter lending standards in Q2, particularly for household credit, alongside rising credit risk for both corporate and household borrowers. Banks anticipate stronger demand for corporate loans, especially from small and medium-sized enterprises, but weaker demand for household mortgages, while non-banks foresee tighter standards, higher credit risk (except at life insurers) and firmer loan demand except at mutual credit cooperatives.