KakaoBank Lowers Loan Interest Rates by up to 0.93%P
K Bank Raises Deposit Rates Alongside Loan Rate Cuts
TossBank Also Considering Interest Rate Hikes on Savings and Deposits
[Asia Economy Reporter Minwoo Lee] Since the introduction of the loan-deposit interest rate spread disclosure system, internet-only banks have been actively lowering loan interest rates and raising deposit product interest rates. This move is interpreted as an effort to avoid criticism of "interest profiteering" while keeping up with the competition for customers against commercial banks.
According to the financial sector on the 26th, KakaoBank decided to lower the interest rates on jeonse and monthly rent deposit loans by about 0.31 to 0.41 percentage points (P). On this day, the lower limit of the general jeonse and monthly rent deposit loan base interest rate became 3.714%. The interest rate on unsecured loans was also reduced by up to 0.93%P, bringing the lowest rate to 4.036%, and the loan limit was raised from 100 million KRW to a maximum of 250 million KRW. The "overdraft loan" product, which had been suspended since last October, has resumed accepting new applications, and the interest rate was also decided to be lowered by an average of 0.69%P. Most loan product interest rates, except for mortgage loans, were reduced.
K Bank is also actively making moves. Even before the loan-deposit interest rate spread disclosure system was implemented on the 22nd, it lowered the interest rates on jeonse loans by up to 0.36%P. Interest rates on unsecured loans and overdraft loans were also lowered by up to 0.4%P and 0.5%P, respectively. The day before, it raised the interest rates on two types of installment savings and the lump-sum savings service "Challenge Box" by up to 0.8%P.
The recent implementation of the loan-deposit interest rate spread disclosure system is seen as a factor behind the increased criticism of banks for "interest profiteering." Since commercial banks are also lowering loan interest rates and raising deposit product interest rates, internet-only banks, which generally have higher average loan-deposit interest rate spreads, have become more aggressive in their operations. According to the Korea Federation of Banks, as of last month, the loan-deposit interest rate spreads of the five major commercial banks (KB Kookmin, Shinhan, Hana, Woori, NH Nonghyup) ranged from 1.04 to 1.40%P, while internet-only banks ranged from 2.33 to 5.60%P, showing a difference of more than 1%P.
Toss Bank, which faced the harshest criticism for "interest profiteering" with the largest interest rate spread of 5.60%P, is also reviewing various measures, including raising deposit product interest rates. Recently, a 300 billion KRW capital increase was confirmed, securing "ammunition."
Meanwhile, commercial banks are raising deposit interest rates one after another following the reduction of loan interest rates. This appears to be a swift response, conscious of criticism of "interest profiteering" and the Bank of Korea's additional 0.25%P base rate hike as of the previous day. On the previous day, KB Kookmin Bank raised savings and installment savings interest rates by up to 0.40%P, and Woori Bank (up to 0.50%P), Hana Bank (0.30%P), and NH Nonghyup Bank (up to 0.40%P) also raised their rates.
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