[1mm Geumyung Talk] "Other Companies Get Praise"…Banks Can't Smile Despite Good Performance

[Asia Economy Reporter Bu Aeri] Although the four major financial groups are expected to break their highest records with over 9 trillion won in net income for the first half of this year, banks are not exactly in a position to smile. Market bank officials lamented, "We might need to emphasize the interest rate cuts more in the earnings announcement materials." Unlike other companies that receive praise whenever they achieve record earnings, banks face criticism for 'profiting from interest' the more their performance improves. Ahead of the Q2 earnings announcements, banks are busy gauging public opinion by highlighting that they have 'lowered loan interest rates.'

According to KB Kookmin Bank on the 12th, a preferential interest rate of 0.2 percentage points (p) per annum will be uniformly applied to new customers with mixed-rate mortgage loans. The temporary interest rate cuts implemented in April for mortgage loans and jeonse (key money deposit) loans (up to 0.45%p for mortgage loans, up to 0.55%p for jeonse loans) will be extended until further notice. KB Kookmin Bank will reduce the new interest rates on loans supporting low-income workers and small business owners, who are financially marginalized, by 1%p per annum.

Shinhan Bank decided to reduce the interest rate to 5% per annum for one year for mortgage loan customers who were paying over 5% interest as of the end of June. Additionally, Shinhan Bank announced plans to lower new mortgage loan interest rates by up to 0.35%p and jeonse loan rates by 0.3%p. Woori Bank has also extended the 1.3%p preferential interest rate, previously offered to customers with internal credit ratings within grade 7 for fixed (mixed) mortgage loans, to customers up to grade 10 starting last month. This effectively lowers the additional interest rate by 1.5%p across all Woori Bank credit grades.

The reason banks are moving so quickly is that they are facing criticism from politicians and financial authorities for 'profiting from interest.' Moreover, with the Q2 earnings announcements starting next week, the pressure from public opinion is intensifying.

According to financial information provider FnGuide, the combined net income (attributable to controlling shareholders) forecast for the four major financial holding companies?KB, Shinhan, Hana, and Woori?for Q2 this year is approximately 4.53 trillion won. The net income for the first half of the year is expected to surpass 9 trillion won. This figure exceeds the previous record high of 8.09 trillion won set in the first half of last year.

As the interest burden on highly leveraged borrowers has increased sharply during the rapid rise in interest rates, public sentiment has worsened, and politicians and financial authorities, aware of this, have been applying pressure on the financial sector day after day. Kim Joo-hyun, the newly appointed Financial Services Commission chairman, said at a press conference on his inauguration day, "It is difficult to say precisely whether the current interest income of banks is excessive or not, but it is reasonable to ask whether it makes sense that banks and financial companies are making a lot of money while customers are struggling," adding, "The financial industry needs to respond to this." This has led to interpretations that the FSC will emphasize management and accountability regarding criticism of banks profiting from interest.

An official from the banking sector said, "Basically, Korean customers tend to have a strong perception that they have given their money rather than using and paying for bank services, so the atmosphere is different from other companies," and added, "For banks, whose image is important, the burden of public opinion is inevitably significant."

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