Thirteen local banks last year recorded a total net profit of 8.4 trillion won ($7.5 billion) and paid out 3.4 trillion won in dividends in March, said Rep. Kim Young-hwan of the opposition Democratic United Party on Wednesday.

Kim, a member of the National Policy Committee, said that, based on the reports he received from the Financial Supervisory Service, greed was prevailing among the banks that paid record-high dividends despite the shaky economy and high household debt. The payout ratio of local banks was 26.7 percent in 2009 but rose to 63.3 percent in 2010 and marked 40.7 percent last year, according to Kim.

“The overall payout ratio rose in 2010 because Hana Bank paid dividends of over 1.93 trillion won, nearly double the year’s net profit of 985 billion won, to make capital for Hana Financial Group’s acquisition of Korea Exchange Bank,” said Kim.

He explained that when excluding Hana, the payout ratio of local banks was the highest in 2011, recording 45.5 percent.

Arguing that such high net profits came from banks’ unjust hiking of loan interest rates, Kim said they were receiving just public criticism for the “dividend party.” He added that they had even been advised by the FSS earlier this year to restrain dividends.

“FSS should urgently work out countermeasures to have the banks restrain paying too-high dividends and lower loan interest rates to lessen the burden of households and companies as well as prepare for future financial crises,” said Kim.

By Park Min-young  (claire@heraldcorp.com)