S. Korean bank lending, deposit rates see largest fall in 9 months

SEOUL, Dec. 29 (Yonhap) -- South Korean banks' lending and deposit rates fell by
the biggest margin in nine months in November on the back of steep policy rate
cuts, the central bank said Monday.
The average lending rate for households and companies reached 7.53 percent last
month, down 0.26 percentage point from a month earlier, according to the Bank of
Korea (BOK). The November figure was the largest monthly drop since February when
the rate fell by 0.35 percentage point.
The average interest rate on deposits fell 0.36 percentage point to 5.95 percent
in November, marking the biggest monthly fall since February when the rate shed
0.61 percentage point, it said.
"Local banks' lending rate sharply declined as the BOK's key rate cut drove down
market rates like yields on certificates of deposit (CDs)," an official at the
BOK said. "Given falling market rates in December, banks' lending and deposit
rates would fall further." Yields for CDs and government bonds serve as
benchmarks for market rates.
In December, the BOK cut the key interest rate by a record full percentage point
to an all-time low of 3 percent in a bid to prop up the slowing economy. Since
early October, the central bank has trimmed the rate by a combined 2.25
percentage points.
sooyeon@yna.co.kr
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