Local banks offer 3.1 tln won to smaller firms in Jan.

SEOUL, Feb. 5 (Yonhap) -- Local banks provided 3.1 trillion won (US$2.24 billion)
in loans to smaller companies last month in a bid to help them better cope with
cash shortages amid the slumping economy, the financial watchdog said Thursday.
Outstanding loans extended by a total of 18 local lenders to smaller companies
reached 425.5 trillion won in January, according to the Financial Services
Commission. Loans to small and medium enterprises (SMEs) declined 1.8 trillion
won in December as banks tried to shore up their balance sheets at the year-end
by reducing bad loans.
The data comes as the South Korean banks are wary of lending money to smaller
firms as the fast slowing economy and the credit crunch are increasing the amount
of bad debt. Banks have faced conflicting pressure to increase lending to SMEs
while raising falling capital adequacy ratios.
The January gain in SME loans stayed at a similar level with an average 3.8
trillion won rise in January recorded during the past five years.
"But marginal companies are feeling funding squeezes as local banks are reluctant
to extend loans to high-risk industries and companies with low credit ratings,"
the watchdog said in a statement.
The delinquency ratio for SME loans came in at 1.7 percent as of the end of
December, up from 1.5 percent at the end of September, it added.
sooyeon@yna.co.kr
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