Demand for bank loans expected to grow in Q2

A reading above zero means bank lending will continue to increase, while a reading below the benchmark means demand will likely shrink.

The quarterly reading is based on a survey of 15 banks and 184 nonbank lenders between March 2 and 17.

Demand for fresh loans from big companies is expected to grow in the second quarter, while the index gauging the demand from small and medium-sized companies comes to 20 for the April-June period, compared with 13 for the previous quarter, it said.

The BOK said demand for new mortgages is likely to decrease in the second quarter due to a possible slowdown in home transactions and a rate hike.

The government has tightened restrictions on housing-related borrowings to put a cap on rapidly growing household debt.

South Korea's outstanding household credit -- which is composed of household loans and credit card spending -- came to 1,344.3 trillion won ($1.19 trillion) at the end of 2016, up 11.7 percent from a year earlier.

A separate index measuring demand for fresh loans from local savings banks came to 13 for the second quarter, up from 11 a quarter earlier, according to the BOK.

Indices measuring credit risks of large firms came to 20 for the April-June period, down from 27 in the previous quarter.

Meanwhile, an index measuring credit risks of households came to 17 from 20 during the cited period. (Yonhap)