Top 5 Banks' Deposits and Savings Reach Record 750 Trillion Won... Up 90 Trillion Won YoY

Deposit Growth Rate Twice as Fast as Savings
Investor Sentiment Focused on Expectations of Further Base Rate Hike

[Image source=Yonhap News]

[Asia Economy Reporter Minwoo Lee] Since entering the interest rate hike period this year and with the stock market shrinking, the 'money move' of funds flowing into safe assets such as bank deposits and savings is accelerating. The amount has increased by nearly 90 trillion won in one year.

According to the financial sector on the 1st, as of the end of last month, the balance of deposits and savings at the five major commercial banks?KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup?was 750.5658 trillion won. This is an increase of more than 28 trillion won compared to the previous month. Compared to the end of last year, it increased by about 60 trillion won, and compared to the same month last year, nearly 90 trillion won flowed into deposits and savings within one year. It is interpreted that funds flowed from risky assets to safe assets as the Bank of Korea took a 'big step' last month by raising the base interest rate by 0.5 percentage points (P) at once and continued to raise interest rates this year.

In particular, the increase in deposits was significant. At the end of last month, regular savings at the five major commercial banks increased by 1.7% (652.4 billion won) compared to the previous month, while time deposits increased by 4% (27.3532 trillion won). Since additional interest rate hikes are becoming a foregone conclusion within this year, there is a growing tendency for investment sentiment to concentrate on deposit products that allow freer withdrawals and deposits.

Meanwhile, household loans have been declining daily due to concerns about interest rate hikes. As of the end of last month, the balance of household loans at the five major commercial banks was 697.4367 trillion won, a decrease of 2.2155 trillion won compared to the previous month. It has decreased for seven consecutive months this year, falling below 700 trillion won for the first time in June. The decrease is also gradually increasing, with 802 billion won in April, 1.3302 trillion won in May, and 1.4094 trillion won in June.

In particular, despite the regulation limiting credit loan limits to 100% of annual income being lifted from last month, credit loans decreased by 1.8533 trillion won in just one month. As loan interest rates rise following the base interest rate hike, it appears that credit loans, which are somewhat unclear in purpose, are being repaid quickly. However, since first-time homebuyers can now borrow up to 80% of the house price starting this month, attention is focused on whether the household loan trend will change in the future.