Top 5 Banks See Decline in Loan-Deposit Interest Rate Spread Last Month... Interest Profit Business Slowed Down

November Average 0.88% Points
0.19% Points Decrease Compared to Previous Month
Only Woori Bank Slightly Increased

[Asia Economy Reporter Kwon Hyun-ji] Last month, the interest rate gap between household loans and deposits at the five major commercial banks narrowed compared to the previous month. This is interpreted as the financial authorities' efforts to manage the loan-deposit interest rate spread to curb banks' 'interest profiteering' are proving effective.

According to disclosures on the Bankers Association Consumer Portal on the 25th, as of November this year, the average household loan-deposit interest rate spread (the difference between household loan interest rates and deposit interest rates) of the five major commercial banks?KB Kookmin, Hana, Shinhan, Woori, and NH Nonghyup?was 0.88 percentage points. This is a decrease of 0.19 percentage points from the previous month's average of 1.07 percentage points.

Looking at each bank, NH Nonghyup Bank had the largest household loan-deposit interest rate spread at 1.33 percentage points, followed by Woori Bank at 1.08 percentage points, Shinhan Bank at 0.84 percentage points, Hana Bank at 0.71 percentage points, and KB Kookmin Bank at 0.44 percentage points. Except for Woori Bank, NH Nonghyup, Shinhan, Hana, and KB Kookmin Banks saw decreases of 0.27, 0.23, 0.28, and 0.26 percentage points respectively compared to the previous month. Only Woori Bank saw an increase of 0.1 percentage points.

The narrowing of the loan-deposit interest rate spread means that banks' margins from the gap between loan and deposit interest rates have decreased. This is interpreted as the effect of the financial authorities' ongoing measures to reduce the interest rate spread. Since July, the financial authorities have been disclosing the loan-deposit interest rate spread monthly and have directly urged banks to refrain from raising deposit and loan interest rates.

The loan-deposit interest rate spread of internet banks, which have a high proportion of loans to medium- and low-credit borrowers, expanded compared to the previous month. As of last month, Toss Bank had the largest household loan-deposit interest rate spread at 5.61 percentage points, followed by K Bank at 2.28 percentage points and Kakao Bank at 1.59 percentage points. These figures increased by 0.24, 0.71, and 0.39 percentage points respectively compared to one month earlier.