IBK to supply more loans to smaller firms in the new year

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IBK to supply more loans to smaller firms in the new year

State-run Industrial Bank of Korea plans to provide more loans to smaller firms next year in a bid to help them weather the economic slowdown, its head said.

IBK plans to make 38 trillion won ($35.5 billion) available for SMEs in 2013, up from 36 trillion won estimated for this year, Cho Jun-hee, president of IBK, told reporters late Thursday.

IBK, which mostly caters to SMEs, also said it plans to lower the ceiling of lending rates for smaller firms and households to a one-digit rate of 9.5 percent.

“The move may lead the bank to face reduced earnings by some 100 billion won next year, but the decision was indispensable to support SMEs,” Cho said.

Local banks are facing a tough business environment as the economic slowdown is raising credit risks for borrowers and a long streak of low rates is squeezing their net interest margin (NIM), a gauge of profitability.

Cho said that the bank plans to beef up its risk management in the face of the economic slowdown and make efforts to expand the base of non-interest income to make up for falling interest income.

IBK’s third-quarter earnings fell 39.9 percent on-year to 246.8 billion won, and its NIM reached 2.08 percent in the third quarte, down 0.1 percentage point from three months earlier.

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