Woori, Hana, and Other Commercial Banks Raise New Year Savings Interest Rates

Deposit interest rates are falling, likely continuing the downward trend in deposit rates

[Asia Economy Reporter Kwon Hyun-ji] Major commercial banks have started raising installment savings interest rates since the beginning of the new year. However, deposit interest rates continue to fall, and the downward trend in deposit rates is expected to persist for the time being.

According to the financial sector on the 8th, Woori Bank raised the interest rates on major installment savings products by up to 0.8 percentage points on the 5th. The ‘Woori 200-day Installment Savings’ and ‘WON Installment Savings’ increased by 0.8 percentage points and 0.6 percentage points respectively, applying a maximum annual interest rate of 4.7%. The ‘Woori SUPER Main Transaction Installment Savings’ was raised by 0.5 percentage points, offering a maximum annual interest rate of 5.15% (based on regular installment savings). Branch-specific special installment savings such as ‘Woori (Branch Name) Installment Savings’ and ‘Woori (Company Name) Installment Savings’ also increased by 0.5 percentage points, providing up to 5% annual interest. This interest rate hike applies to customers who subscribed to these products from the 5th onward.

Hana Bank also adjusted upward the interest rates applied to representative installment savings products such as ‘Salary Hana Monthly Compound Interest Installment Savings,’ ‘Main Transaction Hana Monthly Compound Interest Installment Savings,’ and ‘My Mind Installment Savings.’ For ‘Salary Hana Monthly Compound Interest Installment Savings,’ customers can receive up to 6% (1 year, pre-tax) interest with preferential rates applied.

However, since the upward adjustment is limited to some installment savings products and deposit interest rates are falling, deposit rates are not expected to turn upward. Commercial banks have lowered 1-year fixed deposit interest rates by 0.46 to 0.95 percentage points over the past month. The interest rates, which rose to 5% annually at the end of last year, are currently formed in the mid-4% range.

This decline in deposit interest rates began after the financial authorities’ directive to refrain from raising rates excessively in November last year. The financial authorities urged the financial sector to restrain excessive competition for funding, fearing that excessive deposit rate hikes could trigger a liquidity crisis and lead to higher loan interest rates.