![\"Graphic](\"https:\/\/www.newsbeep.com\/nz\/wp-content\/uploads\/2026\/11\/77W4X3OB55GDDK43B4HB6ROQEI.jpg\")
Graphic = Claude<\/p>\nThe average rate on overdraft lines of credit (Shin Yong-han credit line loans) at internet-only banks stayed in the 7% range for a second straight month. That is more than 1.5 percentage points higher than the five major banks. Analysts said the internet banks’ need to keep a certain share of loans to mid- to low-credit borrowers and the burden of managing credit risk are affecting their rate competitiveness.<\/p>\n
According to the Korea Federation of Banks on the 2nd, the average rate on newly issued overdraft lines at the three internet banks, including Kbank(279570), KakaoBank(323410), and Toss Bank, was 7.16% a year in September. It stayed in the 7% range for two consecutive months following August (7.30%). Compared with January at the start of the year (6.04%), it rose 1.12 percentage points.<\/p>\n
Graphic = Claude<\/p>\n
During the same period, the average overdraft rate at the five major banks\u2014KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup\u2014was 5.48% a year. That was 1.68 percentage points lower than the internet banks. The gap, which widened to 2.13 percentage points in August, narrowed somewhat but remains high.<\/p>\n
A rate gap also appeared among borrowers with high credit scores. In September, in the KCB credit score band of 951\u20131000, the average rate at the three internet banks was 6.54% a year, 1.10 percentage points higher than the five major banks (5.44%). In August, the gap between the two banking groups also reached 1.06 percentage points.<\/p>\n
One reason average lending rates are higher at internet banks is their different borrower mix compared with commercial banks. Internet banks perform a policy role of expanding lending to mid- to low-credit borrowers. The financial authorities require internet banks to maintain the share of loans to mid- to low-credit borrowers at 30% or more of average balances within total unsecured loans.<\/p>\n
The higher the share of loans to borrowers with relatively lower credit, the greater the credit risk borne by banks and the higher the average lending rate can be. The internet banking industry says that in meeting its target share for loans to mid- to low-credit borrowers, it has no choice but to reflect funding expense and credit loss risk in rates.<\/p>\n
In fact, in September the average KCB credit scores of new overdraft borrowers at KakaoBank and Toss Bank were 903 and 924, respectively. Those were lower than the averages at the five major banks (946\u2013964). When the two banks’ average scores fell in August to 857 and 882, their average overdraft rates rose to their highest levels this year, at 7.94% for KakaoBank and 7.21% for Toss Bank.<\/p>\n
Rate differences by credit score band are also clear. In September, KakaoBank’s average overdraft rate was 6.78% a year in the 901\u2013950 band, but 8.37% in the next-lower 851\u2013900 band, up 1.59 percentage points. Toss Bank likewise saw rates in the same bands rise from 6.39% a year to 7.80%, up 1.41 percentage points. As creditworthiness declines, the lending rate climbs steeply.<\/p>\n
However, even in the top credit band, internet banks’ average rates are more than 1 percentage point higher than commercial banks. In the top 951\u20131000 band in September, the three internet banks’ average rate (6.54% a year) was 1.10 percentage points higher than the five major banks (5.44%). In August, the gap was 1.06 percentage points. A substantial part of the overall gap (1.68 percentage points) exists regardless of credit quality.<\/p>\n
For internet banks, the task is to secure rate competitiveness while fulfilling the policy role of expanding loans to mid- to low-credit borrowers. From the perspective of high-credit customers, since they bear average rates more than 1 percentage point higher than commercial banks even within the same credit band, the incentive to choose an internet bank may diminish. It has become important to find a balance among inclusive finance expansion, profitability and soundness management, and rate competitiveness. This is why internet banks’ deliberation is growing between the founding purpose of “inclusive finance” and profitability and soundness.<\/p>\n