Savings Banks Expand Competition with Deposit Rates in the 3% Range
Domestic savings banks are stepping up competition by raising deposit interest rates into the 3% range to attract more customer funds. Amid a prolonged period of no base rate hikes and the ongoing trend of money moving to the stock market, savings banks feel the need to compete on rates to retain depositors.
As of February 2026, the annual interest rate for one-year fixed deposits at mutual savings banks rose to 3.05%, up 0.05 percentage points from the previous month. This marks a rebound in February after recording 3.02% at the end of last year and 3.00% in January. Both commercial banks and savings banks have moved to protect their deposit bases as funds continue to flow into the stock market. Savings banks, in particular, are competing to attract short-term funds by offering relatively higher interest rates. The average interest rate for savings deposits at commercial banks also increased by 0.05 percentage points month-on-month to 2.83% as of February 2026, based on new contract amounts. A similar upward trend in deposit rates was observed across non-banking institutions, with savings banks' deposit rates rising by the same margin, indicating a general increase in deposit rates.
A prolonged period of high interest rates can increase borrowers' repayment burdens and complicate delinquency management. Rising funding costs due to higher interest rates can put pressure on savings banks' profitability. Consequently, savings banks must simultaneously address the dual challenges of maintaining financial soundness and securing consumer trust.
In February 2026, the average interest rate for general loans at mutual savings banks stood at 9.58% per annum, up 0.14 percentage points from the previous month. As both deposit and lending rates rise, concerns are growing about the increased repayment burden on borrowers and the management of delinquency rates. If interest rates remain high for an extended period, savings banks will inevitably face pressure on profitability due to increased funding costs. Savings banks are thus in a situation where they must attract deposits by offering competitive rates while simultaneously managing their financial health and maintaining consumer confidence. Furthermore, factors such as competitiveness in non-face-to-face channels, convenience in asset management, and brand reliability will influence the deposit competition landscape. The potential for interest rate fluctuations also makes each savings bank's adaptive capacity a critical variable.