Lee Bok-hyun "Concerns Over Widening Loan-Deposit Interest Rate Gap... Managing to Make Base Rate Cut Effects Tangible"

5-Day Executive Meeting Requests
"Expansion in Recent Months Not Desirable"
"Consult with Financial Services Commission to Secure Budget and Personnel"

[Image source=Yonhap News]

Lee Bok-hyun, Governor of the Financial Supervisory Service (FSS), recently expressed concerns about the widening gap between bank deposit and loan interest rates and announced plans for a thorough inspection.

At an executive meeting on the 5th, Governor Lee pointed out, "At a time when economic agents should feel the benefit of reduced interest burdens due to the base rate cut, it is undesirable that the effect is diluted by the widening deposit-loan interest rate spread."

According to the FSS, the deposit-loan interest rate spread of banks (based on new transactions) fell from 1.37% in January to 1.13% in August, then widened again to 1.22% in September. In particular, the household loan deposit-loan interest rate spread rose from 0.65% in July to 0.83% in September.

The FSS plans to analyze the liquidity situation of individual banks and the trends in deposit and loan interest rates to examine the interest rate transmission path. Especially amid significant volatility in domestic and international financial markets, the FSS intends to manage the situation to ensure that the effect of the base rate cut is not delayed due to increased demand for deposits and bank bond issuance.

Governor Lee also emphasized strengthening supervisory and inspection capabilities to prevent financial accidents, and instructed to review whether there are areas for improvement to ensure appropriate rewards for employees' achievements through dedicated work. He stated, "In an uncertain financial environment, financial accidents can recur at any time," and added, "As the FSS's workload has significantly increased in efforts to promptly contain and manage such incidents, we will actively consult with the Financial Services Commission to secure the necessary budget and manpower."