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Banks' lending rates drop for 3rd straight month in Aug.

All News 12:00 September 29, 2020

SEOUL, Sept. 29 (Yonhap) -- South Korean banks' lending rates fell for the third straight month in August amid falling market rates, central bank data showed Tuesday.

The average interest rate charged on new bank loans came to 2.63 percent in August, down from 2.7 percent the previous month, according to preliminary data from the Bank of Korea (BOK).

It marked the third straight month of decline since June, when the lending rates fell by 0.1 percentage point following the central bank's policy rate cut in May.

The BOK cut the key interest rate to a record low of 0.5 percent in May after delivering an emergency rate cut of half a percentage point in March to cushion the impact of the new coronavirus outbreak.

The central bank kept the base rate steady in late August, as uncertainties from a flare-up in virus cases heightened.

In August, the average lending rate on fresh corporate loans came to 2.68 percent, down 0.06 percentage point from the previous month.

The average rate on new household lending fell 0.07 percentage point to 2.55 percent last month, as rates charged on home-backed loans and unsecured lending declined in line with falls in market rates.

The average rate for bank deposits, meanwhile, fell to a fresh record low of 0.81 percent last month, from 0.82 percent in July, the BOK said.

South Korean lenders' loan-deposit spread, a gauge of banks' profitability from lending, narrowed to 1.82 percentage points in August from 1.88 percentage points in July.

In this photo taken on Sept. 18, 2020, a bank official explains a loan product to a visiting customer. (Yonhap)


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