"Deposit Interest Rates Rising Overnight... 5% Becomes the Trend at Commercial Banks"

[Image source=Yonhap News]

[Asia Economy Reporter Bu Aeri] As the era of high interest rates arrives, deposit products offering interest rates in the 5% range have become the trend among major commercial banks. Banks are absorbing market funds like a black hole. With additional interest rate hikes by the Bank of Korea expected, there are also forecasts that deposits and savings accounts with annual interest rates in the 6% range will soon appear at commercial banks.

According to the Bankers Association disclosure on the 19th, Woori Bank's 'Woori WON Plus Time Deposit' interest rate exceeded 5%, reaching 5.05% for a one-year maturity. Following Woori Bank, other major commercial banks are also launching time deposits with interest rates in the 5% range one after another.

KB Kookmin Bank's 'KB Star Time Deposit' also surpassed 5% with 5.01%, and Hana Bank's 'Hana Time Deposit' is at 5% as of this date. Shinhan Bank's 'Sol Pyeonhan Time Deposit' offers a maximum annual interest rate of 4.95%, also on the verge of breaking into the 5% range. NH Nonghyup Bank's 'NH All One e-Deposit' saw its 12-month maturity product's interest rate rise to 5.1%, but currently offers 4.9% as of this date.

Expanding the range, products offering mid-5% interest rates are not hard to find. BNK Busan Bank's 'The Special Time Deposit' offers up to 5.4% annually. Jeonbuk Bank's 'JB 123 Time Deposit (Maturity Payment Type)' offers up to 5.3%, and Jeju Bank's J Time Deposit (Maturity Payment Type) also provides up to 5.0% interest. Gwangju Bank's 'Horatchacha Digital Deposit' is also at about 5% annually. However, preferential interest rate conditions should be checked.

As deposit interest rates rise day by day, large sums of money are flocking to banks, with the total time deposit size of the five major commercial banks (KB Kookmin, Shinhan, Hana, Woori, NH Nonghyup) surpassing 800 trillion won as of the end of October.

However, as banks absorb market funds like a black hole, concerns about rising loan interest rates are also emerging. The 'Cost of Funds Index (COFIX)', which serves as the benchmark for mortgage loan interest rates in the banking sector, is the weighted average interest rate of funds raised by eight domestic banks and is directly linked to the interest rates of deposit products such as actual deposits, savings, and bank bonds handled by banks.

A commercial bank official said, "The Bank of Korea's Monetary Policy Committee meeting is scheduled for the end of this month, and although there are many differing opinions about the extent, the possibility of an increase is high," adding, "Both deposit and loan interest rates will continue to rise."