May Savings Bank Loan Interest Rate 9.96%→10.21%... 25bp Increase

Bank of Korea 'Weighted Average Interest Rates of Financial Institutions in May 2021'

[Image source=Yonhap News]

[Asia Economy Reporter Kim Eunbyeol] In May, the loan interest rate of mutual savings banks rose from 9.96% to 10.21% in one month, returning to the 10% range after three months. This was due to an increase in corporate loan interest rates at savings banks and a higher proportion of high-interest household loans.

According to the "Weighted Average Interest Rates of Financial Institutions in May 2021" announced by the Bank of Korea on the 29th, the general loan interest rate of mutual savings banks last month was 10.21%, up 25 basis points (1bp=0.01 percentage points) from the previous month (9.96%).

The corporate loan interest rate at savings banks rose from 6.05% to 6.27%, while the household loan interest rate fell from 14.00% to 13.76% during the same period.

The Bank of Korea explained, "The loan interest rate of mutual savings banks increased by 25bp as corporate loans (+22bp) rose due to a decrease in secured loans, and household loans (-24bp) declined mainly in mid-interest loans, but the proportion of relatively high-interest household loans expanded."

Last month, deposit interest rates at non-bank financial institutions mostly remained at the previous month's level. Loan interest rates rose across the board except for Saemaeul Geumgo.

Deposit and loan interest rates at deposit banks showed a slight decline last month.

Last month, the time deposit interest rate based on new contracts at deposit banks was 0.83% per annum, down 1bp from the previous month. The loan interest rate was 2.72% per annum, down 2bp from the previous month. Based on balances, the total deposit interest rate at the end of last month was 0.66% per annum, down 1bp from the previous month, and the total loan interest rate was 2.78% per annum, also down 1bp.

Regarding time deposit interest rates, fixed deposits (+1bp) rose despite the decline in market interest rates due to preferential rates offered by some banks for liquidity ratio management, but market-type financial products fell by 6bp, causing the rate to drop from 0.84% to 0.83%.

Loan interest rates fell for both corporations (-1bp) and households (-2bp), resulting in an overall average loan interest rate decline from 2.74% to 2.72% compared to the previous month.

Large corporate loan interest rates fell by 2bp due to the decline in benchmark interest rates, but small and medium-sized enterprises saw a 1bp increase as some banks handled high-interest loans. For household loans, benchmark interest rates fell, causing mortgage (-4bp), guarantee (-6bp), and group (-44bp) loan interest rates to decrease, but general unsecured loans (+4bp) rose due to some banks increasing their additional interest rates, resulting in an overall slight 2bp decrease from 2.91% to 2.89%. Based on balances, both deposit (-1bp) and loan (-1bp) interest rates declined.

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