S.Korean banks to tighten lending in Q1

Credit risks will force South Korean banks to tighten lending practices in the first quarter.

Local lenders say that debt-servicing capabilities of both companies and households would weaken due to the persistent risk factors such as the eurozone fiscal crisis and the global economic downturn.

Lending attitude index, which gauges local banks'lending practices over the next three months, stood at minus 2 for the January-March period, down from 2 in the previous quarter, according to the Bank of Korea (BOK).

The index is based on a survey of 16 domestic banks conducted by the BOK between Dec. 10 and 24. A reading below zero means the number of banks, which will restrict their lending, outnumbered that of lenders that will ease them.

The figure marked the lowest since minus 4 tallied in the fourth quarter of 2009.

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