Deposit interest rates drop to low 4% range... Balance also decreases

[Image source=Yonhap News]

[Asia Economy Reporter Buaeri] The deposit interest rates of the five major commercial banks have fallen to the low 4% range. Just two months ago, the interest rates of commercial banks were in the 5% range, but as they declined, the balance of time deposits also decreased last month.

According to the disclosure by the Korea Federation of Banks on the 7th, the interest rates of major time deposit products (12 months, as of the 6th) at the five major commercial banks (KB Kookmin, Shinhan, Hana, Woori, NH Nonghyup) are recorded at 4.10% to 4.36%.

Looking at each bank, KB Kookmin Bank's 'KB Star Time Deposit' offers an annual maximum interest rate of 4.21%, Shinhan Bank's 'Sol Pyeonhan Time Deposit' offers up to 4.30% annually. Woori Bank's 'WON Plus Deposit' offers 4.36%, Hana Bank's 'Hana Time Deposit' provides up to 4.35% annually. NH Nonghyup Bank's 'NH All One e-Deposit' offers up to 4.10% annually.

The interest rates of these products have dropped by about 0.4 percentage points on average compared to two weeks ago. Compared to two months ago, they have fallen by about 0.7 percentage points. In this regard, a commercial bank official explained, "As expectations arise that the Bank of Korea will not sharply raise the base rate further, market participants are also trying to lower interest rates, and overall, the trend is downward."

As the deposit interest rates of the five major banks have stalled, the balance has also decreased. Last month, the balance of time deposits at the five major banks decreased by 8.862 trillion KRW from the previous month to 818.4366 trillion KRW, marking the first decline since March of last year. However, due to the stagnation in the stock and real estate markets, deposits still remain an attractive financial investment method, so it is expected that the outflow will not be significant. In fact, although time deposits have recently shown a slight slowdown, compared to the same month last year, they have increased by a whopping 163.5007 trillion KRW.