Bank Deposit Rates Rise to 3.7% as Deposits Top 1,010 Trillion Won
As bank deposit rates climb, the interest earned on deposited money is growing. One-year fixed deposit rates at major banks have risen to the mid-3% range annually, and fixed deposit balances at the five largest banks have surpassed 1,010 trillion won. This is a development worth noting for anyone interested in deposit interest income and bank fund flows.
According to the banking sector on the 24th, KakaoBank recently raised rates on its main deposit products, including fixed deposits and flexibly-savings accounts, by 0.10 percentage points. As a result, the rate on its one-year fixed deposit rose to 3.70% per annum with no special conditions required. KakaoBank has raised its fixed deposit rates a total of five times since February this year.
The five major commercial banks have joined the wave of increases. Woori Bank raised the rate on its one-year 'WON Plus Deposit' from 3.40% to 3.50% per annum on the 18th, its second increase this month following an adjustment from 3.20% to 3.40% on the 10th. KB Kookmin Bank raised the one-year rate on its 'KB Star Fixed Deposit' by an additional 0.10 percentage points to 3.50% per annum. Hana Bank also lifted the one-year rate on its 'Hana Fixed Deposit' from 3.30% to 3.40%, while Shinhan Bank raised its rate from 3.20% to 3.40%, a 0.20 percentage-point increase. NH NongHyup Bank raised the base rates on its lump-sum and installment deposits by 0.20 to 0.25 percentage points from the 23rd, and also increased the base rate on its long-term savings products by 0.25 percentage points.
The rising rates have fueled an inflow of money into banks. Fixed deposit balances at the five major banks—KB Kookmin, Shinhan, Hana, Woori, and NH NongHyup—stood at 1,010.3722 trillion won as of the 17th. Compared with 1,005.2319 trillion won at the end of August, that is an increase of 5.1403 trillion won in just over two weeks.
Rising deposit rates boost interest income for depositors, but at the same time increase funding costs for banks.
