Term deposits at five major banks decreased by 20 trillion won in one month
The deposit interest rate was lowered following the base interest rate cut.
Term deposits at major commercial banks, which had been on the rise before the interest rate cut, turned to decline as demand for the last train surged. More than 20 trillion won was reduced in just one month. It is interpreted that the deposit interest rate was adjusted downward due to the Bank of Korea’s base interest rate cut.
According to the financial sector on the 4th, more than 21 trillion won was withdrawn from term deposits at five major commercial banks, including KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup, last month alone.
The balance of term deposits at the five major banks was 927.916 trillion won as of the end of last month, a decrease of 21.1285 trillion won from the previous month.
It had previously increased for seven consecutive months from May to November last year, but then turned to decline. Term deposits at the five major banks increased by 75.3381 trillion won over 7 months.
In May last year, 16.8242 trillion won was poured in, and in July and August 18.1879 trillion won and 16.3256 trillion won were poured in, respectively. In October last year, 11.542 trillion won was inflow.
This is due to the ‘last-minute demand’ to place funds in bank deposits before interest rate cuts begin in earnest.
However, as the banking sector has recently begun lowering deposit interest rates due to the Bank of Korea’s base interest rate cut, it appears that financial consumers have turned to other options instead of deposits.
When the Bank of Korea lowered the base interest rate in October last year and again in November, major banks reflected this and lowered their deposit interest rates.
Interest rate cuts continued last month. On the 20th of last month, Hana Bank lowered the base interest rate for 13 types of deposits by 0.05 to 0.25 percentage points. On the 23rd of last month, Shinhan Bank lowered the basic interest rate for 16 types of deferred deposits by 0.05 to 0.25 percentage points and for 20 types of savings deposits by 0.05 to 0.20 percentage points. On the 26th of last month, Nonghyup Bank lowered its deposit interest rate, and on the 30th, Kookmin Bank lowered its deposit interest rate.
Accordingly, the interest rates on the major term deposit products of the five major banks were 3.15-3.22% per annum as of the previous day, down 0.05% points at the lower end and 0.18% points at the upper end compared to a month ago (3.20-3.40% per annum).
The number of waiting funds seeking other investment sources has increased. At the end of last month, the five major banks’ demand deposits, including quick deposit and withdrawal savings deposits (MMDA), totaled KRW 631.2335 trillion, an increase of KRW 23.5 trillion from the previous month. Demand deposits can be deposited and withdrawn at any time, so they are treated as funds to watch the market before deciding on an investment destination.
An official from the banking sector said, “As deposit interest rates fall, financial consumers look for other investment sources instead of re-depositing maturing deposits, which can be interpreted as a decrease in deposit balances and an increase in waiting funds.”
He added, “The increase in waiting funds appears to be due to the seasonal effect at the end of the year, as well as the demand to hold cash as market conditions became uncertain.”
Meanwhile, despite the decline in deposits, term deposits continued to increase. As of the end of last month, the term deposit balance was 39.9277 trillion won, an increase of 387.2 billion won from the previous month. It has been increasing for 9 months since April of last year.
However, the increase is decreasing from KRW 1.2157 trillion in September last year to KRW 910.2 billion in October and KRW 622.9 billion in November.
An official from the banking sector added, “Deposits are sensitive to interest rates because they tie up a relatively large amount of money, but since savings are a product for saving money and are relatively less sensitive to interest rates, the balance does not appear to have decreased even when interest rates fell.”
[서울=뉴시스]
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