The banks` interest on loans to corporate dropped for the first time to a 7 percent level.
The Bank of Korea (BOK) announced yesterday that the average interest rate on loans to corporate recorded 7.85 percent in April, 0.17 percent down from 8.02 percent in March.
The interest rate has shown a slight declining tendency since December of 1999 (8.17 percent), and it fell below 8 percent in April. During the same period, the interest rate on loans to household dropped 1.37 percent, from 10.08 percent to 8.71 percent.
The interest rate on loans to large companies fell to 8.18 percent in April from 8.38 percent in March, due to the expansion of the short-term revolving facility. And the interest rate loans to the small and medium companies declined to 7.72 percent from 7.86 percent, due to the reduction of interest rate for the superior companies.
The interest rate on loans to household also has maintained the declining tendency since last November, due to the competition for expanding the loans between the banks, and recorded 8.71 percent in April.
The average interest rate on new deposits also recorded 5.14 percent. But since the downfall has become less (0.45 percent in February, 0.21 percent in March, and 0.08 percent in April), there will not be decrease of the interest rat on new deposits.
The non-bank financial institutions such as the merchant banks, the mutual savings & finance companies, and the credit unions have lowered the interest rate, following the declining tendency of interest rate in the banks. For the interest rate on new deposits, the merchant banks increased 0.15 percent over the previous month, but the mutual savings & finance companies and the credit unions dropped respectively 0.36 percent and 0.38 percent. And the interest rate on loans decreased by 0.33-1.09 percent.