Eun Sung-soo, Financial Services Commission Chairman, "Savings Banks Must Lower Loan Interest Rates Further"

Eun Sung-soo, Chairman of the Financial Services Commission

[Asia Economy Reporter Kim Hyo-jin] Eun Sung-soo, Chairman of the Financial Services Commission, urged on the 16th that "(Savings banks) should strive to supply funds to middle- and low-credit borrowers at interest rates lower than the current levels."

Chairman Eun made these remarks at the 'Savings Bank Industry CEO Meeting' held at the Government Seoul Office in the afternoon, stating, "Although household credit loan interest rates at savings banks are gradually declining, there are still many criticisms that the rates remain high."

He said, "Providing funds at lower interest rates to middle- and low-credit borrowers will enhance customers' repayment capacity, enabling mutual growth between savings banks and customers, and will also strengthen the operational foundation of savings banks."

Chairman Eun added, "If savings banks actively fill the interest rate gap of around 10% seen in the credit loan market, their role as the backbone of the overall financial system supporting low-income people who find it difficult to access banks will be solidified, and they will secure sustainable competitiveness as financial companies for the common people."

He also raised concerns that the role of savings banks as regional financial institutions is weakening as large savings banks concentrate their loans in the metropolitan area. He urged, "It is necessary to strengthen efforts to supply funds for local low-income people, small business owners, and small and medium-sized enterprises."

Chairman Eun further diagnosed, "Since savings banks mainly serve customers who are relatively vulnerable in repayment capacity, they will be the first and most sensitive to domestic and external risk factors." He warned, "If they focus excessively on household loans without thorough credit screening and risk management, or prioritize expansion centered on high-risk, high-return assets, they should be aware and cautious that this could lead to repeating past mistakes."

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