Toss Bank outpaces bigger rivals in workers' pay

(Toss Bank)

Internet-only lender Toss Bank led the local banking industry by paying its employees the highest salaries last year, surpassing even the nation's top five commercial banks.

According to recent management disclosure reports from the Korea Federation of Banks, Toss Bank, operated by financial technology company Viva Republica, boasted an average annual salary of 126.2 million won ($92,000) for employees in 2023, a notable 11.5 percent increase from the previous year's 113.14 million won.

In its third year of operation, Toss Bank's employee salaries exceeded even those of the country's top five traditional commercial lenders. The average annual salary at these banks -- Kookmin, Hana, Shinhan, Woori and NongHyup -- rose to 112.65 million won, marking a 3.14 percent increase from the previous year and surpassing the 110 million won benchmark for the first time.

Kookmin Bank led the pack, paying an average of 118.2 million won. Hana followed at 115.66 million won, with NongHyup at 110.69 million won, Woori at 109.7 million won and Shinhan at 109 million won.

Woori Bank recorded the largest on-year increase, with a 7 percent rise in average salary. Kookmin and NongHyup saw increases of 4.78 percent and 4.38 percent, respectively, while Hana's salaries edged up by 1.06 percent. Shinhan was the only bank to see a decrease, with average salaries dropping by 1.13 percent from the previous year.

Unlike Toss Bank, other internet-only banks saw salary decreases. Kakao Bank reported a significant average drop of 22.7 percent to 96.9 million won, primarily due to reduced bonuses from temporary factors like the initial public offering. K bank also saw a 4 percent on-year decrease to 82.5 million won.

Among the 18 banks that disclosed their figures, Citibank Korea, a subsidiary of US-based Citigroup, reported an average salary of 114.24 million won, surpassing the average of the five major local banks.

Kookmin Bank led in executive compensation, paying an average of 472.5 million won per person last year. The average annual salary for executives at the five major commercial banks was 312.9 million won, while the three internet-only banks averaged 269.9 million won.

Monday's disclosures also highlighted a significant increase in the interest rate spread — a key profit driver for banks — likely contributing to the salary hikes.

The interest rate spread, the difference between the loan interest rate banks receive from borrowers and the deposit interest rate they pay to depositors, serves as a fundamental source of bank profits. Last year, the average interest rate spread for new Korean won transactions at the five major commercial banks was 1.38 percentage points, up from 1.16 percentage points in 2022.

By Choi Ji-won(jwc@heraldcorp.com)