March Bank Sector Deposit and Loan Interest Rates Fall Across the Board... Corporate Loan Interest Rates Down 25bp

[Asia Economy Reporter Eunbyeol Kim] As the Bank of Korea lowered the base interest rate to 0.75%, both deposit and loan interest rates at deposit banks fell simultaneously in March.

According to the "Weighted Average Interest Rates of Financial Institutions in March 2020" announced by the Bank of Korea on the 29th, the average loan interest rate at deposit banks last month decreased by 17 basis points (1bp=0.01 percentage points) from 3.08% to 2.91% compared to the previous month.

Short-term benchmark interest rates such as CDs (91-day) and bank bonds declined, and as the government increased low-interest policy fund loans in response to the novel coronavirus disease (COVID-19), corporate loan interest rates dropped by 25bp. Large corporate loan interest rates fell by 24bp, and small and medium-sized enterprise loan interest rates decreased by 22bp.

In the case of household loans, interest rates fell across the board, including mortgage loans (-4bp), guaranteed loans (-3bp), and general unsecured loans (-21bp). However, the decline was limited as the proportion of relatively high-interest general unsecured loans expanded. Household loan interest rates decreased by 2bp compared to the previous month.

Savings deposit interest rates dropped by 16bp from 1.43% to 1.27%. Pure savings deposits centered on time deposits and installment savings, and market-type financial products centered on financial bonds (-16bp) and RP (-18bp) each fell by 16bp compared to the previous month.

On a balance basis, both deposit and loan interest rates fell by 5bp and 7bp respectively compared to the previous month.

In the case of non-bank financial institutions, deposit interest rates all declined, and loan interest rates fell for credit unions (-3bp) and mutual finance (-1bp), but rose for mutual savings banks (+10bp) and Saemaeul Geumgo (+4bp).

The proportion of relatively high-interest household loans increased for mutual savings banks, and the proportion of unsecured loans increased for Saemaeul Geumgo.

This content was produced with the assistance of AI translation services.