'Toss Bank' with the Largest Loan-Deposit Interest Rate Gap... Impact of Expanded Loans to Medium and Low Credit Borrowers

Among the 3 Internet Banks, Toss Bank Has the Largest Loan-Deposit Interest Rate Spread at 4.79%P
"The Highest Proportion of Loans to Mid-to-Low Credit Borrowers with High Interest Rates Is the Biggest Factor"

[Asia Economy Reporter Eunju Lee] In an effort to curb excessive "interest profiteering" by banks, the loan-to-deposit interest rate spread (loan interest rate - deposit interest rate) for each bank has been disclosed since the 22nd of last month. Among the three internet banks, Toss Bank showed the largest household loan-to-deposit interest rate spread.

According to the loan-to-deposit interest rate spread comparison statistics from the Korea Federation of Banks on the 20th, Toss Bank recorded the highest household loan-to-deposit interest rate spread (4.76%P) among the three internet banks in August. K Bank recorded 3.13%P, and Kakao Bank recorded 1.96%P.

Toss Bank also recorded the highest household loan-to-deposit interest rate spread excluding policy-based low-income financial products at 4.76%P. Following were K Bank at 3.13%P and Kakao Bank at 1.86%P.

The loan-to-deposit interest rate spread refers to the difference between deposit interest rates and loan interest rates. It is an indicator used to examine whether banks are excessively profiting from interest margins. Currently, the loan-to-deposit interest rate spread is disclosed as the difference between the bank's average loan interest rate and savings deposit interest rate.

The loan-to-deposit interest rate spread excluding policy-based low-income financial products has been included in additional disclosures starting this month as part of government policy. This was intended to eliminate the illusion that the spread appears larger when banks handle a large volume of high-interest-rate low-income policy products among household loans.

In the case of Toss Bank, it was explained that the relatively large proportion of loans to middle- and low-credit borrowers among the three internet banks had a significant impact. According to the Korea Federation of Banks disclosure, as of the end of June, the proportion of credit loans to middle- and low-credit borrowers (mid-interest loans) was 36.3% for Toss Bank, 22.2% for Kakao Bank, and 24.0% for K Bank.

A Toss Bank official stated, "Toss Bank focuses on embracing middle- and low-credit customers who generally have higher loan interest rates. The proportion of middle- and low-credit customers among Toss Bank's loan customers is about 38% (as of the end of July), the highest among all banks, and more than 1.5 times higher compared to other internet-only banks based on the June disclosure. This contributes to the higher loan-to-deposit interest rate spread."