5 Major Banks' Loan-Deposit Interest Rate Spread Widens After 5 Months... Remains in the 0% Range

Both Loan and Deposit Interest Rates Decreased, but Deposit Rate Fell More
Among the 5 Major Banks, Hana Bank Has the Smallest Loan-Deposit Interest Rate Spread

The household loan-deposit interest rate spread of the five major banks increased again after five months. According to the Korea Federation of Banks on the 30th, the average household loan-deposit interest rate spread for July based on new transaction amounts at the five major banks (Kookmin, Shinhan, Hana, Woori, Nonghyup), excluding policy-based low-income financial products, was 0.934 percentage points. This is 0.006 percentage points higher than the previous month (0.928%). Although the figure slightly increased, it remained in the 0% range for the second consecutive month.

The loan-deposit interest rate spread is the value obtained by subtracting the deposit interest rate from the loan interest rate and serves as an indicator of a bank's profitability. Both loan and deposit interest rates declined, but the deposit interest rate fell more sharply. The average household loan interest rate in July was 4.602% per annum, down 0.002 percentage points from the previous month (4.604%). The savings deposit interest rate was 3.668% per annum, a decrease of 0.008 percentage points from the previous month (3.676%). As a result, the loan-deposit interest rate spread increased compared to the previous month.

Among the five major banks, Hana Bank had the smallest loan-deposit interest rate spread at 0.83 percentage points. It was followed by Woori Bank at 0.90 percentage points, Shinhan Bank at 0.91 percentage points, Kookmin Bank at 0.92 percentage points, and Nonghyup Bank at 1.11 percentage points.

Internet-only banks showed spreads of 3.39 percentage points for Toss Bank, 2.09 percentage points for K Bank, and 1.25 percentage points for Kakao Bank. Among the 19 banks that disclosed their loan-deposit interest rate spreads, IBK Industrial Bank had the smallest at 0.44 percentage points. Jeonbuk Bank had the largest at 5.76 percentage points.

Meanwhile, corporate loan interest rates fell significantly, reducing the overall loan-deposit interest rate spread. The corporate loan interest rate at the five major commercial banks dropped by 0.084 percentage points over the past month (from 5.322% to 5.238%). As a result, the overall loan-deposit interest rate spread for the five major commercial banks in July was 1.38 percentage points, down from 1.43 percentage points the previous month. The overall spread had widened to 1.738 percentage points in February but has been continuously narrowing since then.

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