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Korean Banks Ride High on Interest Rate Hikes

March 20, 2017 09:21|March 20, 2017 09:21
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The interest rate of commercial banks in Korea is expected to continue an upward trend as the U.S. benchmark interest rate is likely to be raised gradually until 2019.


According to industry sources on March 19, the banking industry is expected to benefit from the hike in U.S. interest rate. The banks' lending rate is picking up, while the deposit rate remains stagnant, leading to the increase in the spread between lending and deposit interest rates.


The banking industry's lending/deposit rate spread stood at 2.00 percentage point in January 2017, up 0.12 percentage point from a month ago. The improvement in the business environment is leading to a surge in stock prices of major banks.


Major financial groups such as Shinhan, KB and Hana enjoyed a sharp increase in net profits last year. Shinhan and KB Financial Group joined the 2 trillion won net profit club last year, while Hana Financial Group achieved record-high profits since the global financial crisis.