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| Bank ATM machines are lined up in Seoul in this file photo. Korea Times file. |
By Yi Whan-woo
Commercial banks are taking a series of measures aimed at sharing the economic burden felt by the public after the government slammed the lenders for making windfall profits from rising interest rates, while turning a blind eye to the worsening livelihoods of Koreans.
On Tuesday, the Korea Federation of Banks (KFB) announced that 20 of its members plan to hire 2,288 people in the first half of 2023, up 48 percent from a year earlier.
The 20 banks include the five biggest lenders _ KB, Shinhan, Hana, Woori and NH NongHyup _ which reaped 39.38 trillion won ($30.4 billion) in combined net interest income last year.
The 2023 earnings marked a 19.4 percent year-on-year increase, largely due to a steep rate hike delivered by the Bank of Korea (BOK) in its policy shift to pre-pandemic levels. The BOK's policy rate currently stands at more than a 10-year high of 3.5 percent, following a 3 percentage point hike between August 2021 and January this year.
The five major banks have been pressured to give back to society some of their rate hike-induced earnings at a time of stagnant economic growth and high inflation when many of their customers are struggling to repay their debts.
For instance, the lenders gave out paychecks worth up to 10 trillion won to about 2,200 employees who voluntarily retired in 2022 as part of an industry-wide digital transformation.
"The banking industry will faithfully serve the public's interests, such as tackling youth unemployment," the KFB said in a press release.
Also on Tuesday, several banks announced separately that they will lower loan interest rates, which have been a source of criticism because such rates were relatively higher than deposit rates.
The nation's largest lender, KB Kookmin Bank, will drop the interest rate on home-backed loans by up to 0.55 percentage point, while internet-only KakaoBank will decrease its credit loan interest rate by up to 0.7 percentage point.
President Yoon Suk Yeol has been pressuring commercial banks to pay more attention to the economic burden shouldered by the public.
Accordingly, the KFB said on Feb. 15 that the banking industry will offer more than 10 trillion won over the next three years to provide financing for low-income households and people with low credit ratings.
Another possible measure being considered is a voting system called "say-on-pay" that asks shareholders to vote on the salaries to be received by the CEO and executives of banks based on their performances.
The government and the ruling People Power Party (PPP) had been against a proposal to impose a windfall tax on the banks. But industry sources said, "There has been a slight change in the atmosphere." The idea was proposed by the liberal-minded, main opposition Democratic Party of Korea (DPK).
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