Specialized Credit Loan Interest Rates at 13 Domestic Banks Are 1.9%P Lower Than Those for the General Public

Assemblyman Kang Min-guk: "The Financial Supervisory Service Must Thoroughly Manage and Supervise Whether the Interest Rate Gap Is Appropriate"

A loan counter at a commercial bank

[Asia Economy Reporter Kwangho Lee] It has been revealed that the average interest rate on credit loans for professionals such as lawyers and doctors is about 1.9 percentage points lower than that for the general public at 13 domestic banks.

According to data titled 'Status of Credit Loans for Professionals and the General Public at 13 Domestic Banks from 2018 to August 2021,' submitted by the Financial Supervisory Service to Kang Min-guk, a member of the National Assembly's Political Affairs Committee from the People Power Party, the average interest rate on professional credit loan products at 13 domestic banks over the past three years was 2.42%, while the average interest rate on general credit loan products was 4.31%, showing a difference of 1.89 percentage points.

The 13 banks include the five major commercial banks?KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup?as well as Korea Citibank, Industrial Bank of Korea, Suhyup Bank, and five regional banks: Daegu, Gyeongnam, Busan, Jeju, and Gwangju banks. SC First Bank, Jeonbuk Bank, Korea Development Bank, K Bank, and Kakao Bank reported that they do not offer credit loan products exclusively for professionals.

Looking at the annual difference between the average interest rates of professional credit loan products and general credit loan products, it was 2.0 percentage points in 2018 (professionals 2.85%, general public 4.85%), 1.93 percentage points in 2019 (professionals 2.59%, general public 4.52%), and 1.69 percentage points in 2020 (professionals 2.06%, general public 3.75%), gradually decreasing, but the difference widened again to 1.87 percentage points in January to August this year (professionals 2.10%, general public 3.97%).

The difference in average loan limits between professional credit loans and general credit loans also widened, from 52 million KRW in 2018 (professionals 186 million KRW, general public 134 million KRW), 63 million KRW in 2019 (professionals 194 million KRW, general public 131 million KRW), to 69 million KRW in 2020 (professionals 200 million KRW, general public 131 million KRW). From January to August this year, the average loan limit for professional credit loans was 203 million KRW, while that for general credit loans was 135 million KRW, showing a difference of 68 million KRW.

The bank with the lowest interest rate on professional credit loan products was Suhyup Bank, with an average of 2.84%. It was followed by Shinhan Bank (2.91%) and Daegu Bank (2.99%). From January to August this year, Suhyup Bank's average interest rate on professional credit loan products was 2.48%.

On the other hand, the bank with the highest loan limit for professionals was Citibank, with an average of 400 million KRW. It was followed by Daegu Bank (360 million KRW), and Woori Bank, Gyeongnam Bank, and Nonghyup Bank (each 300 million KRW).

Assemblyman Kang said, "Applying preferential interest rates to high-income professionals, who have a lower risk of defaulting on principal and interest, may seem appropriate given market characteristics," and emphasized, "The Financial Supervisory Service must thoroughly manage and supervise whether the interest rate differences and personal credit evaluations between high-income groups such as professionals and the general public are appropriate."