Average salary at Korean banks exceeds $81,086 in 2021 amid high interest income

[Sources : KB, Shinhan, Hana, Woori, NH]

South Korean commercial lenders are under pressure to act more responsibly in their management after they have come under scrutiny for paying high salaries with record sales from interest income at the cost of financial consumers.

According to an analysis by Representative Yoon Chang-hyun of the People Power Party (PPP) into annual salaries at commercial lenders on Sunday, the average salary of employees including bonuses at five major banks KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup exceeded 100 million won ($81,086) for the first time in 2021. The average salary of top 10 percent neared 200 million won.

The high salary trend is projected to continue for a while as they enjoy revenue growth amid high interest rate environment.

The top payer was KB Kookmin Bank - the average annual salary was 110.7 million won in 2021 - followed by Shinhan Bank with 105.29 million won, Hana Bank with 105.25 million won, Woori Bank with 101.7 million won, and NH Nonghyup with 101.6 million won.

The high earnings last year at major banks were from high interest profit from loans.

The high earnings last year at major banks were from high interest profit from loans. [Source : Gettyimagesbank]

The floating rates for mortgage loans topped 8 percent for the first time in January since the 2008 financial crisis. The rates may go higher as the Bank of Korea (BOK) raised the base rate by another 25 basis points on Friday, adding pressure to interest paying households.

Deposit rates, on the other hand, that have reached up to 6 percent in December, are on a downward trend. Now, most deposits offer a 4 percent annual interest.

Local lenders are estimated to have earned more than 53 trillion won from interest gains for 2022, an increase of over 8 trillion won from the previous year on the back of increased margin.

Lenders are criticized for shortening business hours by one hour amid strict social distancing in the wake of Covid-19 pandemic. Restrictions have been lifted but operating hours still remain short.

The financial authority and political parties are calling on the banks to be more socially responsible. The financial authority is enhancing monitoring on the banks’ further hike in loan interests.

Political parties are also up front in proposing to revise the country’s bank act that calls for banks to report their quarterly profit for monitoring purposes.