Despite criticism of banks for 'interest profit-making', the interest rate spread (the difference between loan and deposit interest rates) of KB Kookmin Bank exceeded 2% in the first half of this year. KB Kookmin Bank was the only one among the four major banks (Hana, Woori, Shinhan, and KB Kookmin Bank) to achieve over 5 trillion won in interest income, narrowing the gap in net profit with leading bank Shinhan Bank from 550 billion won last year to 80 billion won this year.
According to the semi-annual reports of the four major banks released on the 19th, KB Kookmin Bank's interest rate spread in the first half of the year was 2.01%. This figure is derived from subtracting the average deposit interest rate from the average loan interest rate based on the won. In contrast, the interest rate spreads of Hana and Woori Banks, calculated on the same basis, were both 1.74%, while Shinhan Bank recorded 1.71%, making KB Kookmin Bank 0.3% higher at most.
Despite KB Kookmin Bank's interest rate spread decreasing from 2.24% in 2023 to 2.13% last year, it maintained a higher level than other banks. Hana and Woori Banks did not exceed a 2% spread during this period, and Shinhan Bank recorded 2.02% in 2023, which was 0.22% lower than KB Kookmin Bank.
The situation is similar when limited to household loans. According to the Korea Federation of Banks, the average interest rate spread for household loans at KB Kookmin Bank from January to May this year was between 2.45% and 2.49%, the highest among the four major banks. Compared to Shinhan Bank, which had the smallest rate spread during this period, KB Kookmin Bank's spread was 0.22% to 0.35% higher. KB Kookmin Bank's interest rate spread for household loans reduced to 2.46% in June, making it the second lowest after Woori Bank (2.49%).
The increase in KB Kookmin Bank's interest rate spread is attributed to relatively low deposit interest rates. While loan interest was collected similarly to other banks, the bank paid less interest on deposits. In the first half of this year, KB Kookmin Bank's deposit interest rate (average interest rate for deposits) was 2.18%, which was up to 0.3% lower than Hana Bank (2.48%), Woori Bank (2.42%), and Shinhan Bank (2.41%). Conversely, during the same period, KB Kookmin Bank's loan interest rate (average interest rate for loan claims) was 4.19%, which differed by only up to 0.07% from other banks.
The interest rate spread directly translated into performance. In the first half of this year, KB Kookmin Bank's interest income was 5.2043 trillion won, the highest among the four major banks. This was about 800 billion won more than Shinhan Bank's interest income of 4.4652 trillion won. This indicates that the bank achieved the best performance in an environment where interest income has been limited due to lending regulations. During the same period, KB Kookmin Bank's net interest margin (NIM) was also the highest among the four major banks at 1.74%. In contrast, KB Kookmin Bank's non-interest income was the lowest at 572.1 billion won.
With these results, KB Kookmin Bank has a greater possibility of surpassing Shinhan Bank to become the leading bank this year. The net profit gap between KB Kookmin Bank and Shinhan Bank narrowed from 547.6 billion won in the first half of last year to 79.2 billion won in the first half of this year. KB Kookmin Bank's net profit for the first half of this year was 2.1876 trillion won, a 45.3% increase from the same period last year (1.5059 trillion won). In contrast, Shinhan Bank recorded a net profit of 2.2668 trillion won, a 10.4% increase from 2.0535 trillion won during the same period.