[Editorial] Take public sentiment into consideration

Banks are private companies, but they have a public role. Many of them had been bailed out with public funds during past crises. They must be more conscious of public sentiment.

Major commercial banks are celebrating their best performance in 2022 with generous bonuses. NH Nonghyup Bank is indulging employees with a 400 percent bonus on top of their basic salary, Shinhan Bank 361 percent, and KB Kookmin Bank 280 percent. KB is handing out a handsome 3.4 million won ($2,698) in a separate incentive to every employee. Hana Bank and Woori Bank are expected to come up with similar fat compensations after they settle collective wage bargaining.

Banks, as any company in the market economy, can reward employees after a bumper year. But the bank binge is different as their profit came from higher interests on corporate and individual borrowers. The Bank of Korea has yanked up the base rate from a record low of 0.5 percent in August 2021 to 3.25 percent in December to tame inflation from ultra-loose liquidity from the pandemic.

The jump in the base rate has only fattened interest revenue for banks. According to the Financial Supervisory Service (FSS), the interest revenue of banks reached a whopping 40.6 trillion won ($32.6 billion) as of the third quarter last year, up 6.9 trillion won from the same period in 2022. Financial authorities played a part in the enormous profits of commercial banks because the authorities only capped interest rates for savings so as not to cause over-competition among commercial banks to draw clients. That resulted in a much faster rise in lending rates.

Individuals, the self-employed and corporate borrowers are choking under a steep rise in debt financing costs. Young couples who bought homes through bank loans while housing prices soared; homeowners who have to seek loans to return lump-sum deposits due to a plunge in rent prices; the self-employed who survived Covid-19 through loans; and private companies who cannot raise funding for operation are all stifled under high interest burden. Household debt towers over the gross domestic product. Consumer debt reached 1,870.6 trillion won as of September.

While they profit from the gap in deposit and lending rates, banks have been cutting services. Bank hours have not returned to the pre-pandemic level of 9 a.m. to 4 p.m. from the current 9:30 a.m. to 3:30 p.m. Some branch officers of KB Kookmin close during lunch hours even though office workers must use their lunch hours to visit banks.

Their impudent ways are appalling. Financial Services Commission (FSC) Chair Kim Joo-hyun advised banks to return to the pre-pandemic hours since Covid-19 restrictions on their business are lifted. Banks are private companies, but they have a public role. Many of them had been bailed out with public funds during past crises. They must be more conscious of public sentiment.