Corporate Lending Rate Falls to 2.77%
The Bank of Korea announced on May 27 that the average lending rate of local banks fell 0.11 percentage point to 2.8 percent a year last month. It is the lowest since records began in January 1996 and fell for the fourth consecutive month.
Specifically, the average corporate lending rate reached an all-time low of 2.77 percent. “This is because the rate of lending to non-large companies dropped 0.27 percentage point to 2.86 percent as a result of the expansion of low-interest government loans,” the central bank explained. Last month, the rate of lending to large companies edged down 0.07 percentage point to 2.65 percent.
In the meantime, the average household lending rate rose 0.01 percentage point to 2.89 percent as government mortgage loan reduction caused the housing mortgage loan rate to rise 0.1 percentage point to 2.58 percent a year.
The deposit rate also reached an all-time low of 1.2 percent. As a result, the banks’ loan-deposit margin fell from 1.64 percent to 1.6 percent, signaling a decline in their profitability.