Toss Insight warns of mixed risks, deposit slowdown for banks

Toss Insight, the financial management research institute under Viva Republica, released a comprehensive industry outlook report Friday highlighting the mixed structural vulnerabilities facing Korean commercial and digital banks amid growing macroeconomic uncertainties.

The report, titled "The Era of Uncertainty: Banking Industry Outlook and Response Strategies," establishes three distinct economic paths — baseline, optimistic and pessimistic — spanning the second half of 2026 through 2027 to gauge bank profitability, asset quality and growth indicators.

Rather than offering flat projections, the institute used probability distributions to map out potential "tail risks" — extreme scenarios where financial metrics could deteriorate significantly.

The analysis underscores a double-edged sword across all projected paths.

While high-interest rates and economic expansion boost net interest margins and loan growth, they simultaneously increase debtor repayment burdens, driving up loan delinquency and nonperforming asset rates.

Conversely, a low-rate, cooling economy eases borrower distre ...