S. Korean banks likely to tighten lending criteria in Q4: Report

Seoul, Oct 27 (IANS) Banks in South Korea are expected to tighten lending standards in the fourth quarter, particularly for household loans, as authorities have tightened loan restrictions to clamp down on the overheated housing market, a central bank survey showed on Monday.

According to a Bank of Korea (BOK) survey of 203 financial institutions, including 18 banks and 26 mutual savings banks, the index measuring banks' lending attitudes stood at minus 14 for the October-December period, reports Yonhap news agency.

A reading below zero indicates that more lenders plan to tighten rather than ease credit standards. The figure compares with 7 in the first quarter, minus 13 in the second quarter and minus 28 in the third quarter.

By sector, the index for home mortgage lending stood at minus 28 for the fourth quarter, while that for loans to large corporations came in at 6.

"Lending attitudes toward businesses are expected to ease somewhat, while lending attitudes toward households are projected to tighten in line with the government's real estate policy measures," a BOK official said.

"The survey also found that credit risks for both companies and households are projected to remain a persistent concern amid domestic and global uncertainties," the official added.

The government has introduced a series of measures to cool the real estate market. Most recently, it designated 21 additional districts in Seoul as speculative zones, bringing all 25 districts in the capital under stricter regulations.

It also tightened lending rules, cutting the mortgage loan cap to as low as 200 million won ($139,665) from 600 million won set in June.

Meanwhile, holdings of foreign securities among South Korean investors in the third quarter rose nearly 60 per cent from a year earlier, with U.S. stocks dominating investors' foreign portfolio, data showed on Monday.

Local investors held overseas stocks and bonds worth $220.3 billion as of end-September, up 59.7 per cent from the same period a year earlier, according to the data from the Korea Securities Depository (KSD).

The value of US stocks and bonds held by South Korean investors totaled $177.6 billion, accounting for 80.7 per cent of their total overseas securities holdings. Investments in US stocks alone totaled $155.5 billion, or about 94 per cent of their total overseas equity holdings.

US electric vehicle titan Tesla Motors Inc. was South Korean investors' top pick, with their holdings reaching $27.5 billion. Tesla was the top pick of local investors for the past three consecutive quarters.

--IANS

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