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Banks' lending rates fall in Feb.

All News 12:00 March 31, 2020

SEOUL, March 31 (Yonhap) -- Lending rates on fresh loans extended by banks in South Korea continued to drop from a month earlier in February, central bank data showed Tuesday.

The average interest rate on all new bank loans came to 3.08 percent in the month, down 11 basis points from 3.19 percent tallied in January, according to the data from the Bank of Korea (BOK).

The rate on all outstanding loans came to 3.35 percent, down 0.03 percentage point over the cited period.

This photo, taken March 25, 2020, shows a long line of people at a Seoul office of the Small Enterprise and Market Service waiting to be interviewed for special, low-interest loans that are part of a government support package for local businesses amid the spread of the new coronavirus. (Yonhap)

The rate on fresh loans has been on a decline since October, when the BOK delivered its second base rate cut in three months, sending the key rate to a record low of 1.25 percent.

The latest drop, however, came amid a looming economic downturn caused by the new coronavirus outbreak that forced the BOK to slash its growth outlook for Asia's fourth-largest economy to 2.1 percent from the previous 2.3 percent.

The central bank has also carried out its first emergency rate reduction in over a decade, slashing the base rate by half a percentage point to a new record low of 0.75 percent.

In February, the average rate on new corporate loans lost 13 basis points to 3.19 percent, while the average rate on fresh household loans shed only 0.05 percentage point to 2.90 percent.

The rate on home-backed household loans added 0.01 percentage point to 2.52 percent.

The average rate paid by banks on fresh deposits slipped 0.11 percentage point to 1.43 percent, keeping the gap between the rates charged and paid by banks unchanged at 1.65 percent.


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