"Loan Additional Interest Rates to Be Revised... Must Calculate Differently According to Loan Type and Size"

Financial Services Commission Changes Loan Additional Interest Rate Calculation Method
Requires Deposit Interest Rates to Reflect Market Rate Changes at Least Once a Month

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[Asia Economy Reporter Sim Nayoung] On the 6th, the Financial Services Commission announced the disclosure of the interest rate spread between deposits and loans for all domestic banks, and also stated that it will revise the loan markup interest rate calculation system. Until now, most banks have complied with the loan interest rate model guidelines, but there was a lack of transparency and consistency in the calculation of detailed markup interest rate items.

When calculating the loan markup interest rate, the cost (labor cost, material cost) allocation method is applied first, and differentiated costs are applied according to the type and scale of loans. This is because applying a single cost rate regardless of loan type may result in excessive cost allocation for some loans.

For the 'risk premium,' which is the difference between the funding interest rate and the loan base rate, indicators that accurately reflect the actual funding interest rate are used to prevent overestimation of the funding interest rate indicator. A representative example is changing the indicator from existing bank bonds to a mix of deposits and bank bonds, or to COFIX.

In addition, when calculating capital costs (the opportunity cost of necessary capital held to prepare for unexpected losses), it has been revised to use reasonable figures based on the management plan's target return on equity (ROE) or recent actual ROE.

Deposit interest rates have also been improved so that each bank checks market interest rate fluctuations at least once a month and reflects them in the base interest rate.

Currently, the system operates by maintaining the base interest rate and adjusting preferential interest rates to apply differentially to customers, but going forward, the base interest rate will be adjusted after checking at least once a month and applied equally to all customers.

Furthermore, it has been decided to incorporate into the model guidelines that banks should have internal control departments such as compliance monitoring departments check the interest rate calculation system at least twice a year.

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