South Korean banks’ lending rate fell in May due to preferential interest rate support for small and medium companies, central bank data showed Friday.
The weighted average rate for new bank loans slipped 0.01 percentage point from a month earlier to an annualised rate of 4.19 percent in May, according to the Bank of Korea (BOK).
The rate for banks’ new corporate loans dipped 0.01 percentage point to 4.13 percent in May compared to the previous month.
The lending rate for large companies rose 0.01 percentage point to 4.10 percent, but the rate for small and medium firms declined 0.03 percentage points to 4.15 percent.
The corporate loan expansion policy through preferential rates led to a lower lending rate for small companies.
The rate for fresh bank loans to households gained 0.03 percentage points over the month to 4.46 percent in May.
Mortgage loan rate for households added 0.01 percentage point to 4.32 percent, but credit loan rate retreated 0.14 percentage points to 5.49 percent.
Expectations emerged for the BOK’s policy rate hikes amid the recovering economy and the steeper inflation, caused by the Middle East tensions.
The BOK left its benchmark interest rate unchanged at 2.50 percent after reducing it by 25 basis points in February and May of 2025 and in October and November of 2024.
The weighted average rate for new bank deposits was up 0.01 percentage point over the month to an annualized 2.93 percent in May.
