The Golden Age of Deposits... 19 Trillion Won Increase in One Month at 5 Major Banks

Savings deposits decreased by 647.2 billion won
Household loans decline for 11 consecutive months... Corporate loans on the rise

[Image source=Yonhap News]

[Asia Economy Reporter Minwoo Lee] The balance of time deposits at the five major commercial banks?KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup?in November increased by more than 19 trillion KRW compared to the previous month. This contrasts with savings deposits, which actually decreased compared to the previous month. Household loans continued their decline for the 11th consecutive month.

According to the banking sector on the 1st, the balance of time deposits at the five major commercial banks last month was recorded at 827.2986 trillion KRW, an increase of 19.071 trillion KRW compared to the previous month. This marks seven consecutive months of growth since April. On the other hand, the balance of savings deposits decreased by 64.72 billion KRW from the previous month to 38.3545 trillion KRW, showing a decline for the second consecutive month following the previous month. This appears to be due to an increase in "interest rate nomads" seeking time deposits that offer relatively higher interest compared to the principal as interest rates rise sharply. Demand deposits also decreased by 64.72 billion KRW from the previous month to 606.3528 trillion KRW.

Meanwhile, household loans continued to decline steadily. As of last month, the balance of household loans at the five major commercial banks was 693.0346 trillion KRW, down 61.29 billion KRW from the previous month. This marks 11 consecutive months of decline since January this year. In particular, credit loans are decreasing sharply. As of last month, the balance of household credit loans was 121.5888 trillion KRW, down 2.041 trillion KRW from the previous month. This represents a decrease of 17.9684 trillion KRW since the beginning of this year. With consecutive base rate hikes causing market interest rates to rise sharply, it appears that borrowers hurried to repay higher-interest credit loans first.

On the other hand, corporate loans showed steady growth. As of last month, the balance of large corporate loans was 111.3276 trillion KRW, and the balance of small and medium-sized enterprise (SME) loans was 599.0938 trillion KRW. These amounts increased by 4.1802 trillion KRW and 1.5705 trillion KRW respectively compared to the previous month. This is interpreted as a result of more companies seeking funding through bank loans due to tightening bond markets.