Commercial banks here are raising their voices against what they consider “near-sighted” financial policies by the government, as the authorities demand lenders cooperate with strong sets of pump-priming measures to prop up the virus-hit economy.

Officials from major Korean lenders said the government needs to take a longer-term viewpoint when devising financial policies even amid the global economic crisis sparked by the COVID-19 pandemic.

Even if top-tier lenders here reported relatively decent earnings in the first quarter of 2020, they may continue being exposed to concerns over their asset soundness if the government keeps introducing stimulus packages at the cost of the financial institutions, a top-ranking official from one of the nation’s major commercial banks said.

“Despite the better-than-expected first-quarter earnings, we still have a sense of concern due to the government’s short-sighted financial policies under which lenders have to offer more loans to the self-employed and allow individual investors to pay their interest rates later,” the official said.

Starting from as early as 2021, most lenders here are expected to suffer earnings shocks following the government’s makeshift stimulus measures, he noted.

Global ratings companies ― such as Moody’s and Fitch Ratings ― have expressed similar concerns over the lenders.

“Fitch Ratings’ assessment of intrinsic creditworthiness of Korea’s four large commercial banks has turned negative due to mounting pressure on the banks’ operating environment, asset quality and profitability that stems from the severe disruption to economic activities globally in the wake of the coronavirus pandemic,” the ratings firm said in a statement Monday.

“As a result, Fitch has revised the rating outlooks on KB Kookmin Bank and Shinhan Bank to ‘Negative’ from ‘Stable,’” it said.

Fitch also pointed out that the negative outlook came as the lenders’ creditworthiness would be put under “mounting pressure” over the next two years due to measures to contain the coronavirus outbreak here.

Cooperation amid crisis

But economists here are urging the lenders to “stop whining about” the government’s call to comply with its market stimulus drive.

“The coronavirus-induced economic shock was unexpected, so it is natural for the government to take what might seem immature financial policies to take care of urgent problems one by one, which cannot satisfy all interested parties,” DB Financial Investment economist Lee Byung-gun said.

On top of that, the status quo is not something limited to Korea, according to the analyst.

“Most financial organizations ― such as banks ― in most developed nations are eager to join their governments’ stimulus measures to tackle the crisis,” he said.

“This is not a matter of unilateral sacrifice from the commercial banks,” he said. “Lenders can get back what they offered ― such as loans ― sometime later. They may not welcome the government’s movement, as this may have put a brake on their business plans, but my view is that they need to join hands with the authorities in this unexpected crisis.”

Yonsei University economist Sung Tae-yoon said the government, for its part, should also play a proper “mediating role” between virus-hit parties and banks.

“The financial authorities are advised to offer an incentive package to lenders … after the virus panic ends,” he said.

“Any one-sided demand is not desirable even in a time of crisis, as commercial banks are not state-run organizations, but companies with shareholders,” he said.