S Korean bank lending, deposit rates decline sharply in over 10 years

Special Report:Global Financial Crisis

SEOUL, Feb. 27 (Chinese media) --

South Korean banks saw in January the sharpest drop in lending and deposit rates

in more than 10 years with the government's steep cut in interest rates, the

Bank of Korea (BOK) said Friday.

The average lending rate for households and companies

hit 5.91 percent in January, down 0.98 percentage point from the previous month,

according to the BOK.

It was the largest monthly drop since November 1998

when the rate plunged by 1.04 percentage points.

On the other hand, the average deposit rate dropped

to 4.16 percent in January, down 1.42 percentage points from a month earlier.

It posted the biggest monthly fall since August 1998

when the rate made a 1.89 percentage point drop.

"The decline in local banks' lending and deposit

rates can be attributed to the BOK's key rate cut, which in turn drove down

market rates like yields on certificates of deposits," said an official at the

BOK.

Since last October, the BOK has consecutively cut the

interest rate by a total of 3.25 percentage points, to put it at a record low of

2 percent.