On August 2nd, a 4.5% deposit interest rate notice was posted at a bank in Seoul./News 1
The interest rates on major term deposits at the five major commercial banks were found to have risen to the 4% range for the first time in nine months.
According to the Korea Federation of Banks on the 6th, as of the previous day, the interest rates on major term deposits with 12-month maturity at the five major banks, including Kookmin, Shinhan, Hana, Woori, and Nonghyup, were 4.00 to 4.05% per year. It rose 0.35 percentage points from a month ago when the annual rate was 3.65-3.70%. The average interest rate on 12-month maturity deposit products of 79 savings banks is 4.20%, which is not much different from the banking sector.
The reason the financial sector is raising deposit interest rates is because high-interest term deposits worth 100 trillion won are coming to maturity. As financing through bank bonds became difficult due to the Legoland incident last year, banks competitively raised their deposit interest rates to secure funds.
Recently, as the amount of waiting funds in the market has increased, competition in the financial sector for receiving funds is showing signs of heating up again. At the end of last month, the balance of demand deposits at the five major banks, including instant deposit/withdrawal savings deposits (MMDA), was KRW 608.1349 trillion, a sharp increase of KRW 10.1698 trillion from the previous month (KRW 597.9651 trillion). Demand deposits decreased for two consecutive months, reaching KRW 23.4239 trillion in July and KRW 2.4841 trillion in August, but then turned to an upward trend for the first time in three months.
Financial authorities have taken measures to prevent excessive competition for deposits, such as abolishing bank bond issuance limits. Lee Bok-hyeon, head of the Financial Supervisory Service, said at an executive meeting, “As there is a possibility of a ‘money move’ due to the concentration of term deposit maturities at the end of the year, we will re-examine the fund supply and demand plan through a stress test assuming a crisis situation, and high interest rate financing will occur due to asset competition. “Supervise them so they don’t do it,” he urged.
2023-10-05 22:35:00
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