Local savings banks earned the highest net revenue in four years in 2015 from the wide spread between deposit and loan interest rates, the financial regulator’s data showed on Wednesday.
The combined net profit of 79 savings banks came to 2.499 trillion won ($2.16 billion) last year, up 24 percent on-year, according to the Financial Supervisory Service. This marks a notable comeback in four years for the industry that had boomed to a near 3 trillion-won revenue in 2011 but went downhill following a chain of bankruptcies.
Much of the industry’s revenue came from the bigger divergence in deposit-to-loan interest rates, the data showed. The spread as of February was 9.78 percent, 2.57 percentage points higher than two years prior.
The interest paid on deposits with one-year maturity averaged 2.12 percent in February, 0.74 percentage point lower from two years ago, while the annual interest rate for loans rose 1.83 percentage points to 11.9 percent. The spread had broadened despite the central bank slashing the key interest rate by 1 percentage point during the period.
Savings banks are often the last resort for people with low credit scores that leave them with few choices when borrowing money. People with high credit ratings are eligible for loans from commercial banks while those in the mid-tier group can go to cooperative banks.
(khnews@heraldcorp.com)