[Bank Bonus Analysis] ① Executive Bonuses Average 130 Million KRW... Money Festival Amid High Interest Rates

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Major banks paid their executives an average of over 100 million KRW each in performance bonuses last year. Despite criticism over interest-based profits, bank executives received hefty bonuses.

According to data on the 'Performance Bonuses of the Five Major Commercial Banks' from the Financial Supervisory Service, obtained by Asia Economy on the 12th through the office of Rep. Choi Seung-jae of the People Power Party, the average performance bonus for executives at Shinhan, Woori, Hana, and NH Nonghyup banks last year was about 128.19 million KRW. KB Kookmin Bank was excluded from the calculation as it did not submit data for last year among the five major banks.

Looking at each bank, Shinhan Bank executives received the highest average performance bonus last year at 194 million KRW, followed by Woori Bank (128 million KRW), Nonghyup (124 million KRW), and Hana Bank (68 million KRW). Considering that KB Kookmin Bank’s average executive performance bonus was 228 million KRW in 2021, it is estimated that last year’s figure was at a similar level.

Executives at the five major banks?KB Kookmin, Shinhan, Woori, Hana, and NH Nonghyup?have received an average annual performance bonus exceeding 150 million KRW over the five years from 2017 to 2021. By year, the amounts were approximately 160 million KRW in 2017, 149 million KRW in 2018, 142 million KRW in 2019, 165 million KRW in 2020, and 159 million KRW in 2021.

By bank, KB Kookmin Bank executives had the highest average performance bonuses in the industry, with 343 million KRW in 2017, 183 million KRW in 2018, 188 million KRW in 2019, 257 million KRW in 2020, and 228 million KRW in 2021.

Shinhan Bank executives followed with average performance bonuses of 194 million KRW in 2017, 240 million KRW in 2018, 176 million KRW in 2019, 195 million KRW in 2020, and 159 million KRW in 2021. Executives at Woori, Hana, and NH Nonghyup banks had annual average performance bonuses generally in the low 100 million KRW range over the five years, with some fluctuations.

As a result, while borrowers’ lives have become more difficult due to the burden of loan interest in the era of high interest rates, major banks have been criticized for holding a performance bonus feast fueled by the interest rate spread (the difference between loan and deposit rates). According to the Financial Supervisory Service, the rise in loan interest rates last year was even greater compared to past periods of rate hikes. The loan beta (Loan beta: the ratio of loan interest rate changes to base rate changes) indicator released by the Financial Supervisory Service on the 4th showed that the loan beta for all domestic banks based on new loan amounts last year was 101.5%, about twice the average of 54.5% during previous rate hike periods (October 2005 to August 2008, July 2010 to June 2011, November 2017 to November 2018).

Rep. Choi said, "The loan beta reached twice that of previous rate hike periods, indicating that domestic banks raised loan interest rates rapidly. The structure that fattens the pockets of a few bank executives with huge profits gained from loan interest rate hikes must be reformed."