Gwangju Bank's 'Prime Plus Loan' Emerges as a New Powerhouse in Mid-Interest Rate Lending

[Asia Economy Honam Reporting Headquarters Reporter Park Seon-gang] Gwangju Bank (President Song Jong-wook) has emerged as a rising powerhouse in the mid-interest loan market with its Prime Plus Loan.

Gwangju Bank announced on the 26th that its non-face-to-face exclusive mid-interest credit loan, ‘Prime Plus Loan,’ launched to include mid- to low-credit customers, surpassed 100 billion KRW in sales within just over two months of its release.

The ‘Prime Plus Loan’ is highly regarded for embodying President Song Jong-wook’s management philosophy of practicing inclusive finance and leading digital finance in a personal credit loan product, making it even more meaningful.

Despite increased loan demand amid the prolonged COVID-19 pandemic and sluggish economy, financial authorities aiming to stabilize the rising household debt have introduced measures such as total volume regulation on mortgage loans and strengthening DSR (Debt Service Ratio), which has prevented the gap between the two extremes from narrowing.

As a result, the loan threshold in the banking sector has risen, and mid- to low-credit borrowers, who are relatively sensitive to economic changes, are unable to overcome the higher barriers during the economic downturn. They are driven to use high-interest loans from secondary financial institutions or illegal private loans.

In this unfortunate situation, Gwangju Bank quickly launched the ‘Prime Plus Loan’ to embrace mid- to low-credit customers, drawing enthusiastic responses and achieving explosive sales.

The reason ‘Prime Plus Loan’ achieved high sales in a short period is that it accurately identified the financial needs of consumers who are not included in the primary financial sector’s orbit, quickly calculated appropriate limits and interest rates within manageable risk levels, and provided timely financial support.

The convenience of being able to apply anytime via mobile (Smart Banking, Mobile Web Banking) for salaried workers also played a significant role in its popularity.

In fact, when looking at mid-interest loan products from other banks, a considerable portion of sales is targeted at prime customers. In contrast, Gwangju Bank’s ‘Prime Plus Loan’ has about 73% of customers with credit scores of 830 or below (equivalent to grade 4 under the old credit rating system), accurately hitting the purpose and intent of mid-interest loans.

The average interest rate of the ‘Prime Plus Loan’ handled so far is in the high 6% range, outperforming the average interest rates of secondary financial institution loans, which has continued to attract strong interest from financial consumers on loan comparison platforms. It is receiving praise for leading the primary financial sector’s mid-interest loan market.

Song Jong-wook, President of Gwangju Bank, said, “Amid the difficult economic conditions caused by the prolonged COVID-19 pandemic, we focused on developing the ‘Prime Plus Loan’ product to provide timely and necessary financial solutions to customers in urgent need of financial support. By thoroughly understanding the repayment ability of financially marginalized groups through detailed market analysis and the latest evaluation techniques, we differentiated this product from existing ones and expect it to become a new model for mid-interest products in the primary financial sector.”

He added, “We will practice inclusive finance for mid- to low-credit customers who might otherwise be excluded from the primary financial sector and strive to become a 100-year bank equipped with competitiveness that leads digital finance.”

Gwangju Bank’s ‘Prime Plus Loan’ allows salaried workers to apply anytime via mobile (Smart Banking, Mobile Web Banking) for loans up to 50 million KRW, with a repayment period freely selectable within a maximum of 5 years and no prepayment penalty.

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