It is expected that it will be difficult to borrow money from banks again this year. This is because banks concerned about the soundness of loans due to the re-proliferation of the novel coronavirus infection (Corona 19) and the continuing economic uncertainty at home and abroad are expected to raise the lending threshold for businesses and households. In particular, the loan threshold for SMEs is expected to increase further.
According to the’financial institution loan behavior survey results’ (4Q trend and 1Q forecast) released by the Bank of Korea on the 13th, the overall value of the loan attitude index (projected value) of domestic financial institutions in the first quarter of this year was -8.
The loan behavior survey is a survey targeting people in charge of credit services at domestic financial institutions. This survey was targeted to those in charge of credit business at 201 financial institutions (17 domestic banks, 16 mutual savings banks, 8 credit card companies, 10 life insurance companies, 150 mutual financial associations) on December 7-18 last year. I did it. A plus (+) means lending attitude easing, credit risk increase, and an increase in loan demand. Negative (-) means the opposite.
By borrower, large companies -3, SMEs -6, household housing -6, household general -12 respectively. As for the change in the previous quarter by borrower, it is expected that large companies will be frozen from -3 to -3, and small and medium-sized enterprises will have more difficult lending from 3 to -6. Due to the Moon Jae-in government’s loan regulations, household housing, which had strict loans, was slightly reduced from -24 to -6, but it was still negative. In November last year, credit loan regulations were strictly applied, and the household general level from -44 in the previous quarter was greatly eased to -12, but it is expected to be managed most strictly in terms of borrower-specific loan attitudes.
Han Eun explained, “In the first quarter, corporate lending attitudes of domestic banks will be slightly strengthened, centering on SMEs, by reinforcing the re-proliferation of the novel coronavirus infection (Corona 19) and the continuation of uncertainties in the domestic and international economy.” He also predicted that “general household loans will be somewhat strengthened as the government’s regulations on credit loans continue, and household housing loans will be less than that of general loans, but will continue to strengthen.”
While financial institutions’ lending attitude is still strict, demand for lending is still expected to increase. Looking at the loan demand index by borrower, in the first quarter of this year compared to the fourth quarter of last year, large companies changed from -3 to 9, SMEs from 18 to 26, household housing from 24 to 3, and household households from 44 to 18. Lending demand for companies increased significantly compared to the previous quarter, and the household sector declined, but as it is still positive, loan demand is expected to increase compared to the fourth quarter of last year. The BOK said, “In the first quarter, corporate loan demand is expected to increase, mainly from SMEs, due to increased demand for working capital due to decreased sales and increased demand for spare funds due to uncertainty in the real economy.” It is predicted that the demand for general household loans will increase due to demand.”
In the first quarter, the corporate credit risk index recorded 25, three points higher than the previous quarter (22). Large companies and SMEs recorded 12 and 29 respectively, the same as in the fourth quarter of last year, and households were counted at 21, 6 points higher than the previous quarter (15).
An official from the BOK said, “Company’s credit risk is expected to increase, mainly by SMEs due to deterioration in corporate performance due to continued sluggish real economy and continued uncertainty in internal and external conditions.” “Household credit risk is also likely to worsen debt repayment ability due to decrease in household income As a result, it was expected to increase, mainly for vulnerable borrowers such as low credit and low income groups.”
Meanwhile, it was found that the amount of money in the market is still increasing amid the Corona 19 crisis and ultra-low interest rate environment. According to the statistics of’Money and Liquidity in November 2020′ released by the Bank of Korea on the 13th, the amount of money in the broad range (based on M2) in November of last year was 3178 trillion won, an increase of 27 trillion won (0.9%) from October.
This increase was less than in October (34 trillion won), which was the second place in history, but as of the end of November, the absolute size of the broader currency (M2) is still 9.7% more than in November 2019.
By subject, it increased by 15 trillion won in enterprises and 10 trillion won in households and non-profit organizations. Other financial institutions also increased by 4 trillion won. Among financial products, money trusts (+7 trillion won), demand deposits (+6.5 trillion won), and occasional deposits (+4.8 trillion won) were generated after two years.
An official from the BOK explained, “The amount of money in corporations has increased mainly for money trusts and regular deposits for less than two years, and the amount of money for households has increased in the occasional savings deposits and demand deposits.”
Reporter Nam Jeong-hoon email@example.com
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