Cost of funds index continues to fall for 53rd straight month

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Cost of funds index continues to fall for 53rd straight month

The Korea Federation of Banks (KFB) said Wednesday the cost of funds index (CoFI) for all outstanding balances in May dropped 1.77 percent to 1.75 percent.

This is the 53rd straight month the index, a lending benchmark, has fallen.

The CoFI for new funds acquired in May also dropped 0.01 percentage points from the previous month to record 1.54 percent.

“The rate on outstanding balances has continued to decrease as high interest rate deposits dealt in the past have matured and recently made deposits with relatively low interest rates are newly reflected in the calculation,” said the KFB in a press release. “The rate on new funds acquired last month has decreased due to the decrease in market interest rates.”

In fact, the one-year bank bond rates dropped from 1.55 percent in April to 1.53 percent last month.

The CoFI for outstanding balances reflects market rate changes in a gradual manner, while that for new funds tends to change quickly the KFB said.

On year, the CoFI for outstanding balances fell by 0.47 percentage points or from 2.22 percent in May 2015.

The CoFI for new funds dropped 0.21 percentage points during the same period.

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