Seoul:South Korean banks are expected to maintain tight lending standards for households and businesses in the fourth quarter amid growing concerns over credit risks, a central bank survey showed.

According to Yonhap News Agency, the index gauging banks' lending attitudes stood at minus 11 for the October-December period, improving from minus 203 in the previous quarter. This survey, conducted by the Bank of Korea (BOK), included 203 financial institutions, among them 18 banks.

A reading below zero indicates that a majority of lenders plan to tighten lending standards. The index of banks' lending attitudes has remained in negative territory for seven consecutive quarters since the second quarter of 2025. This trend follows financial authorities' efforts to tighten regulations on household lending since late 2024, aiming to control surging household debt and rising housing prices in Seoul and surrounding regions.

The BOK survey indicated that banks are expected to tighten lending standards for non-mortgage household loans, while standards for mortgage loans are anticipated to remain unchanged. Lending standards for both large corporations and small and medium-sized enterprises (SMEs) are projected to tighten compared to the previous quarter.

Credit risks among both households and businesses are expected to increase in the fourth quarter amid rising delinquency rates. Additionally, the survey suggested that demand for household mortgage loans and non-mortgage loans will likely increase in the fourth quarter from three months earlier, while demand for corporate loans is projected to remain nearly flat.