[1mm Financial Talk] "Being a Bank Employee" "Tackling Household Debt"... Confused by Contradictory Messages

President Yoon "Bank Servitude" → Demand for Interest Rate Cut
Chief Secretary Kim "Control Household Debt" → Need for Interest Rate Hike
Financial Sector "Confused by Conflicting Messages"
'Bank Management Status Disclosure Report' to be Released This Week

[Image source=Yonhap News]

"Small business owners struggling with high interest rates sighed deeply, saying it feels like 'being a servant to the banks,' as they work themselves to death only to hand over all their earnings to repay loan principal and interest." (President Yoon Suk-yeol, 30th)

"If a household debt crisis occurs, its impact will be several tens of times greater than the 1997 foreign exchange crisis caused by corporate debt." (Kim Dae-gi, Chief Presidential Secretary, 29th)

The financial sector is unsettled by the strong messages coming out of Yongsan for two consecutive days. When such messages have been issued before, financial authorities and banks acted swiftly. In February, President Yoon warned banks, saying, "The Financial Services Commission should prepare related measures to prevent public resentment caused by the 'bank money feast,'" and "To stop interest profiteering, the banking oligopoly must be broken." Since then, financial authorities pressured commercial banks to lower interest rates and created a banking system improvement task force to encourage the emergence of new commercial banks, releasing a series of countermeasures.

However, this time, both the banking sector and authorities are responding with "We don't know which tune to follow." According to the president's instructions, lowering loan interest rates is the urgent priority. But considering the Chief Secretary's remarks, it is difficult to move forward easily. Lowering loan interest rates will inevitably increase household debt. As household debt issues have surfaced, financial authorities have been encouraging banks to raise loan interest rates. Following KB Kookmin, Woori, and NH Nonghyup Banks, Shinhan Bank also decided this week to raise interest rates on some mortgage loan products for this reason.

A commercial bank official said, "If we follow Yongsan's demands, we will have no choice but to sharply reduce loans to small business owners while raising mortgage loan rates," adding, "Interest rates should generally follow market trends, but making fine adjustments separately for each loan product will cause confusion." A financial authority official also said, "The Blue House has issued strong messages for two consecutive days, but since the directions for interest rate policy are contradictory, some clarification is needed."

Since President Yoon Suk-yeol's 'servant to the banks' remark, banks have been on edge. This is because detailed information on employee bonuses, voluntary retirement payments, and dividend status of major commercial banks, regional banks, and internet banks is being disclosed while domestic banks continue to post record-breaking profits day after day. The Korea Federation of Banks will release the 'Bank Management Status Disclosure Report.'

A Korea Federation of Banks official stated, "The report is expected to be released as early as November 1st, or at the latest within this week." The disclosure covers all 18 member banks of the Federation, excluding the Korea Development Bank. The report will be based on last year's management status. Management status for this year and beyond will be compiled and announced by the end of April next year.

The report will include basic bank overviews such as total assets, branches, and number of employees, along with asset-liability, revenue-expense, and net income utilization details. In particular, the revenue-expense section must specify interest income including the interest rate spread between deposits and loans, fee income, salaries including bonuses and voluntary retirement payments, social contribution achievements, and provisions. The net income section will include capital reserves and dividend status. It will show what banks do, how they generate income, and how the income is utilized.