Despite the financial authorities’ repeated pressure on banks to reduce deposit and loan margins, the deposit and loan interest rate gap widened for three consecutive months. This is because banks have raised the additional interest rate applied to lending rates to manage household loans, while deposit interest rates have decreased due to the decline in market interest rates.
According to the Korea Federation of Banks announcement on the 27th, the average household deposit-to-loan interest rate difference based on new transaction amounts excluding policy microfinance (Sunshine Loan Bank, Sunshine Loan 15, Safety Net Loan) of the five major banks (KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup) last month was It increased by 0.302%p to 1.036%p (p) compared to the previous month (0.734%p).
The interest rate gap between deposits and loans, which had continued to decline since April (0.764%p) this year until July, began to trend upward in August and grew further in October, increasing the extent of expansion for three consecutive months.
This is because lending interest rates have risen while deposit interest rates, including deposits, have fallen. In accordance with the financial authorities’ household debt management policy, banks have been raising lending rates one after another since August by raising the additional interest rate or lowering the preferential interest rate. The average household loan interest rate excluding policy microfinance of the five major banks was 4.416% last month, up 0.288%p from 4.128% the previous month, but the savings deposit interest rate fell 0.014%p from 3.394% to 3.38%.
Among the five major banks, Nonghyup Bank (1.20%p) has the largest difference in deposit and loan interest rates based on new transactions. △Kookmin Bank (1.18%p) △Shinhan Bank (1.01%p), Hana Bank (0.98%p), and Woori Bank (0.81%p).
By bank, Shinhan Bank showed the largest increase, increasing by 0.48%p (0.53%p → 1.01%p). This was followed by Woori Bank by 0.38%p (0.43%p→0.81%p), Hana Bank by 0.3%p (0.68%p→0.98), Kookmin Bank by 0.2%p (0.98%p→1.18%p), and Nonghyup Bank by 0.15%. The extent of expansion was large in the order p(1.05%p → 1.20%p).
Among the 19 banks that participated in the announcement on this day, including internet banks, local banks, and foreign banks, Jeonbuk Bank had the largest household deposit-to-deposit interest rate gap (excluding policy microfinance) based on new transaction amounts (excluding policy microfinance) at 5.93%p, and the smallest was iM Bank. (0.33%p).
The household deposit-to-loan interest rate difference is calculated by subtracting the savings deposit interest rate from the household loan interest rate. As the deposit-to-loan interest rate gap widens, the bank’s interest income also increases.
Financial authorities and politicians are asking the banking sector to reduce the interest rate gap between deposits and loans. Lee Bok-hyeon, head of the Financial Supervisory Service, said at an executive meeting on the 5th, “The difference between bank deposit and loan interest rates is lower than at the beginning of the year, but it is worrisome that it has been widening in recent months.”base interest rate “At a time when economic entities should feel the effect of reducing the interest rate burden due to the cut, it is not desirable for it to be diluted by expanding the deposit-loan interest rate gap,” he said.
Han Dong-hoon, CEO of the People Power Party, also said at a meeting with small and medium-sized businesses, “Even though the base interest rate is maintained at a fairly low level and could go down further, the loan interest rate borne by companies and households is not going down.” “It is a huge burden on households and businesses,” he pointed out.
It is difficult for commercial banks to lower lending interest rates or raise deposit interest rates, so it is difficult to expect any significant changes by the end of the year. A bank official said, “To reduce the difference between deposit and loan interest rates, we need to either raise the deposit/savings interest rate or lower the additional interest rate on the loan interest rate, but both are not easy at the moment,” and added, “There will be no significant change until the end of the year.”
