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This photo shows automated teller machines of major South Korean banks, including KB Kookmin, NH Nonghyup, Shinhan and Woori. (Yonhap) |
The interest margins of major South Korean banks have increased for the third consecutive month in October, data showed Sunday, despite the Bank of Korea's rate cut in the month that marked its first policy pivot in over three years.
The average interest margin of five major banks -- KB Kookmin, Shinhan, Hana, Woori and NH Nonghyup -- came to 1.04 percentage points in October, up from 0.73 percentage point tallied the previous month, according to the data compiled by the Korea Federation of Banks.
It marked the third consecutive month the banks reported a rise in their interest margins, a key measure of profitability for financial institutions. Interest margin refers to the difference between interest received and paid.
Interest margin usually falls when the central bank cuts its borrowing costs, but the banks kept their spreads high as part of efforts to curb the surging household loans, which apparently led to the growth of their interest margins.
Despite the BOK's consecutive rate cuts, market watchers expect the commercial banks' interest margins to remain high for a while due to pressure from the financial authorities to enforce tighter lending restrictions.
The BOK slashed its benchmark interest rate by 25 basis points each in October and November to 3 percent. (Yonhap)
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