South Korea Bank Stocks Rise 2.33% as Central Bank Raises Benchmark Rate to 2.75%

According to securities analysts, South Korea's central bank raised its benchmark interest rate by 0.25 percentage points to 2.75% on July 16, driving bank stocks higher despite broad market weakness. Over the past month, the KRX Banking Index gained 2.33%, marking the only sector to post gains among KRX industry indices, while the KOSPI fell 20.19% in the same period.

The rate increase is expected to widen net interest margins and boost bank profitability as lending rates typically rise faster than deposit rates. KB Securities estimates nine financial holding companies and banks will report combined net profits of 7.19 trillion Korean won in the second quarter, representing a 5.7% increase quarter-over-quarter and 4.3% increase year-over-year.