[Cold Deposit Savings]② High-Interest Products in Mutual Finance Also Near End... Impatient E-yetech Investors

As the deposit interest rates at commercial banks have fallen to the level of the base rate, savers combining deposits and investment strategies ("Yetech") are busy trying to catch the 'last train' for high-interest deposit products in the mutual finance sector that still offer rates in the 4-5% range. Since the deposit interest rates in the mutual finance sector are clearly trending downward, it is analyzed that this influx of funds is nearing its final stage.

According to the Bank of Korea's Economic Statistics System on the 27th, as of the end of December last year, the total deposit balance (deposit liabilities) of mutual finance institutions such as NongHyup, SuHyup, ShinHyup, and Saemaeul Geumgo was 458.5557 trillion KRW, an increase of 1.9% (8.5414 trillion KRW) compared to the previous month. In the case of Saemaeul Geumgo, the deposit balance has continued to increase this year as well. At the end of last month, the deposit balance was 259.9706 trillion KRW, up 3% (8.5497 trillion KRW) from the previous month (251.4209 trillion KRW).

This contrasts with the decline in deposits and savings at commercial banks. The balance of time deposits at the five major banks (KB Kookmin, Shinhan, Hana, Woori, NH NongHyup) has been decreasing every month since November last year, with declines of -8.862 trillion KRW in December and -6.1866 trillion KRW in January. Savings balances also continuously decreased in November (-647.2 billion KRW) and December (-1.1235 trillion KRW).

This trend is the result of standby funds flowing into the mutual finance sector, which still maintains higher interest rates compared to the primary financial sector. The representative time deposit products at the five major commercial banks currently offer interest rates of 3.54% to 3.7% per annum (12-month basis), slightly above the base rate of 3.5%.

Internet-only banks have also lowered their deposit interest rates. Toss Bank reduced the interest rate on Toss Bank accounts (applicable up to 50 million KRW) from 2.3% to 2.2% per annum, and the rate on amounts exceeding 50 million KRW from 4% to 3.8%, a 0.2 percentage point decrease. K Bank also lowered the 'Code K Time Deposit' interest rate by up to 0.2 percentage points, reducing the time deposit rate from 3.8% to 3.6% per annum (12-month basis). Kakao Bank also cut its time deposit interest rates by up to 0.3 percentage points and its free savings deposit rates by up to 0.7 percentage points starting from the 22nd.

On the other hand, there are still quite a few cooperatives or geumgos offering deposit products with mid-5% interest rates in Saemaeul Geumgo, ShinHyup, and others. Deposit products with mid-5% interest rates exist at geumgos located in Chungnam, Daegu, and Gwangju, and in the Seoul area, the Sangbong-dong Saemaeul Geumgo in Jungnang-gu offers an interest rate of 5.2% per annum (12-month basis). The situation is similar for ShinHyup.

However, with the Bank of Korea holding the base rate steady at 3.5%, interest rates in the mutual finance sector are also trending downward, so it is uncertain whether this trend will continue. Recently, high-interest special promotions have almost disappeared. A mutual finance sector official said, "Although there are differences among cooperatives and geumgos, many places have deposit interest rates below 4%. While there is a flow of funds into commercial banks due to tax-exempt benefits, since further increases in deposit interest rates are no longer possible, the growth rate of deposit balances is likely to gradually decrease."