The Bank of Korea published its Loan Officer Survey on Q4 2025 lending developments and the Q1 2026 outlook, indicating that domestic banks are expected to ease lending standards slightly while credit risks remain elevated, especially for small and medium-sized enterprises (SMEs). Loan demand is expected to increase across corporate and household segments. For domestic banks, the lending standards index points to easing for large corporates (6) and SMEs (11) in Q1 2026, while household mortgage lending remains less restrictive than in Q4 (index 6) and other household loans move to neutral (0). Credit risk is expected to stay positive across categories, led by SMEs (28), and loan demand is expected to rise for SMEs (17), household mortgages (11) and other household loans (8), while large corporates remain positive (6). Non-bank financial institutions are expected to maintain an overall tightening stance but with some moderation, as lending standards remain negative across mutual savings banks (-8), mutual credit cooperatives (-24) and life insurers (-3), while credit card companies are flat (0). Credit risks remain a concern across all non-bank types and loan demand is expected to increase in most categories. The survey was conducted from November 25 to December 16, 2025, covering 203 institutions, and the Bank of Korea releases results each quarter in January, April, July and October.
Bank of Korea 2026-01-19
Bank of Korea survey signals slightly looser bank lending standards and rising loan demand for Q1 2026
The Bank of Korea's Loan Officer Survey for Q4 2025 reveals that domestic banks are expected to slightly ease lending standards in Q1 2026, with increased loan demand anticipated across corporate and household segments, despite elevated credit risks, particularly for small and medium-sized enterprises. Non-bank financial institutions are expected to maintain a tightening stance, though with some moderation in lending standards.