South Korean banks forecast the credit risks of larger firms to stay high in the first quarter on concerns about the impact of the yen’s weakness and a liquidity squeeze facing ailing companies, the central bank said Monday.

An index gauging larger firms’ credit risks came in at 16 for the January-March period. This was unchanged from the previous quarter, which was the highest figure since the second quarter of 2009’s identical tally, according to a survey of 16 local banks conducted by the Bank of Korea.

Credit risks refer to the likelihood of borrowers being unable to repay debt.

“Local banks saw the credit risks for larger companies stay high due to the yen’s slide, financial troubles of some conglomerates and economic uncertainty,” the central bank said in a statement.

The yen’s slide is feared to curb local exporters’ profitability as many of Korea’s key shipments overlap those of Japan in overseas markets.

An index measuring small and medium enterprises’ credit risks came in at 31 in the first quarter, staying flat from the fourth quarter and the highest since 34 recorded for the January-March period of 2013, it added.

An index on lending attitudes toward larger companies came in at minus 6 for the first quarter, unchanged from the previous quarter, an indication that local banks are likely to keep their tight stance.

The lower the reading, the likelier banks will tighten their restrictions on lending. A reading above zero means that the number of lenders that will ease lending criteria surpasses that of banks planning to restrict lending. (Yonhap News)