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Banks' lending, deposit rates hit record lows in May

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(Globalpost/GlobalPost)

SEOUL, June 27 (Yonhap) -- South Korean banks' lending and deposit rates fell to fresh record lows in May as the central bank slashed the key interest rates, data showed on Thursday.

The banks' average rates for new loans to households and firms stood at 4.62 percent in May, down 0.11 percentage point from the previous month, according to the data compiled by the Bank of Korea (BOK).

The May data marked the lowest level since January 1996 when the BOK began to compile related data.

The BOK cut the key interest rate by a quarter percentage point to 2.5 percent in May, the first cut in seven months. The central bank lowered the borrowing costs in July and October last year.

The lending rates declined for the fourth straight month in May as market interest rates have been falling amid the BOK's accommodative policy stance.

The average rates for fresh lending to households came in at 4.3 percent last month, down 0.12 percentage point from April, the central bank added.

Meanwhile, the average rate for bank deposits hit a record low of 2.67 percent, down 0.08 percentage point from the previous month, it noted.

South Korean lenders' loan-deposit spread, a gauge of banks' profitability from lending, reached 2.6 percentage points in May, down 0.03 percentage point from the previous month.

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