[Wandering Yetech Tribe] ① Reverse Money Move Continues... Savings and Deposits Increase by 170 Trillion Won This Year

[Asia Economy Reporter Bu Aeri] It has been revealed that the balance of savings and deposits at the five major commercial banks increased by more than 170 trillion won this year. As interest rates continue to soar, the reverse money move phenomenon, where funds flow into commercial banks, is still ongoing. [Related Article] 'Wandering Investment Enthusiasts'

According to the five major banks (KB Kookmin, Shinhan, Hana, Woori, NH Nonghyup) on the 1st, the balance of savings and deposits at these banks (as of November 28) was 860.4864 trillion won, an increase of 13.2571 trillion won compared to the end of October (847.2293 trillion won). Compared to the end of 2021, it increased by 170.4498 trillion won. The balance of savings and deposits has shown steady growth every month this year and surpassed 800 trillion won for the first time in October. The monthly increase in savings and deposits was largely influenced by banks raising deposit interest rates. In November, the interest rates on major deposit products at commercial banks reached the 5% range, attracting market funds like a black hole.

Although the balance of savings and deposits is increasing, demand deposits, which are low-cost deposits, have been decreasing every month. Demand deposits are products that can be freely traded without restrictions on subscription targets, deposit amounts, or deposit periods, but they offer almost no interest. As of November 28, demand deposits stood at 611.0746 trillion won, down 14.9413 trillion won from the previous month. Compared to the end of 2021, they decreased by 84.1704 trillion won. Demand deposits, as low-cost deposits, are classified as core deposits because banks can raise funds by paying low interest. A sharp decline could cause liquidity problems for banks. Earlier, Sung Sanghyuk, Chief Financial Officer (CFO) of Shinhan Bank, stated, "There is much internal concern about the decrease in liquidity deposits among banks."

However, the reverse money move phenomenon has somewhat eased since October. In October, the balance increased by nearly 47.4152 trillion won (6%) compared to the previous month, but as of November 28, it rose by 2% compared to the previous month. The previously soaring deposit interest rates have also slowed down as financial authorities have urged banks to refrain from competition. With the Bank of Korea raising the base interest rate, deposit interest rates, which were expected to exceed 6% after surpassing 5%, have fallen back to the high 4% range.

According to the Bankers Association disclosure (based on 12 months), Woori Bank's 'Woori WON Plus Deposit' (maximum annual 4.98%), Shinhan Bank's 'Sol Comfortable Time Deposit' (maximum annual 4.95%), and KB Kookmin Bank's 'KB Star Time Deposit' (maximum annual 4.7%) are at these levels. Some experts evaluate that deposit interest rates have reached their peak. Bank of Korea Governor Lee Chang-yong also said in an interview with a foreign media outlet the day before, "I hope to conclude the base rate hike around 3.5% annually." This means the hike could end after an additional 0.25 percentage point increase from the current base rate (3.25%).