Growth of bank loans to firms hits 11-month low in Nov.

SEOUL, Dec. 10 (Yonhap) -- The growth of South Korean bank loans to firms slowed
to an 11-month low in November as local banks tightened their grip on corporate
lending amid a slowing economy, the central bank said Wednesday.

As of the end of November, outstanding bank loans to large and smaller firms
totaled 466.3 trillion won (US$325.2 billion), up 3.5 trillion won from a month
earlier, the Bank of Korea (BOK) said. The monthly growth of corporate lending in
November hit the slowest level since December 2007 when such loans declined 4.2
trillion won.
"Lending to large companies sharply slowed as local banks beefed up risk
management amid a credit crunch and the economic slump," said Lee Dae-kun, a BOK
official.
Bank loans to larger companies increased by 900 billion won to 62.2 trillion won,
the slowest monthly growth since May when such lending rose 100 billion won.
Lending to small and medium enterprises (SMEs) advanced by 2.6 trillion won to
404.1 trillion won, the BOK said.
South Korean lenders have been increasingly reluctant to extend loans,
particularly to smaller firms. Local banks are struggling to bolster their
falling capital adequacy ratio, a key barometer of financial soundness, by
scaling back on loans or selling subordinated bonds.
The data came a day before the BOK holds its monthly rate-setting meeting.
Economists say the BOK is widely expected to cut its key interest rate by 0.5
percentage point to 3.5 percent to bolster the country's cooling economic growth.
Since early October, the BOK has trimmed the rate by a combined 1.25 percentage
point to 4 percent.
sooyeon@yna.co.kr
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