August Bank Deposit Interest Rate 0.81%·Loan Interest Rate 2.63%... Again All-Time Low

[Image source=Yonhap News]

[Asia Economy Reporter Eunbyeol Kim] In August, deposit and loan interest rates at deposit banks again hit record lows.

According to the "Weighted Average Interest Rates of Financial Institutions in August 2020" announced by the Bank of Korea on the 29th, the interest rate on new savings deposits at deposit banks last month was 0.81% per annum, down 1bp (1bp=0.01 percentage points) from the previous month.

Following the drop to the 0% range for the first time in June (0.89%), this marks another record low since the Bank of Korea began compiling related statistics in January 1997. This is the third consecutive month of record lows.

The loan interest rate fell by 7bp to 2.63% per annum compared to the previous month. Breaking it down by loan entities, the interest rate on loans to small and medium enterprises decreased from 2.87% to 2.80%, a 7bp drop, and the loan interest rate for large corporations also fell from 2.55% to 2.48%, down 7bp. The interest rate on household loans also dropped 7bp from 2.62% to 2.55%.

The spread between deposit banks' loan interest rates and savings deposit interest rates narrowed by 6bp to 1.82 percentage points compared to the previous month.

As of the end of August, the total deposit interest rate was 0.87% per annum, down 4bp from the previous month, and the total loan interest rate was 2.92% per annum, down 6bp. The spread between total loan and total deposit interest rates narrowed by 2bp to 2.05 percentage points compared to the previous month.

Last month, deposit interest rates at non-bank financial institutions (based on 1-year fixed-term deposits) also declined across the board. Regarding loan interest rates (based on general loans), mutual savings banks and credit cooperatives saw increases, whereas mutual finance and Saemaeul Geumgo experienced decreases in loan interest rates.

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