Money Flows into Savings Deposits Amid Economic Uncertainty... Covered Deposits Reach 2,184 Trillion Won

Balance of Guaranteed Deposits at the End of Q3 Last Year 2,184.2 Trillion Won... 1.3% Increase from Previous Quarter End
Corporate Idle Funds Flow into Bank Savings Deposits... Savings Bank Guaranteed Deposits Also Increased by 2.7%

[Asia Economy Reporter Kwon Haeyoung] Despite low interest rates, the preference for safe assets due to economic uncertainty led to an increase in insured deposits, mainly savings deposits. The flow of corporate idle funds into banks' savings deposits was also notable.

According to the 'Insured Deposit Trends as of the End of September 2019' announced by the Korea Deposit Insurance Corporation on the 9th, the balance of insured deposits at the end of the third quarter of 2019 was 2,184.2 trillion KRW, an increase of 1.3% compared to the end of the previous quarter.

Insured deposits refer to deposits protected by the KDIC (bank and savings bank deposits, financial investment company customer deposits, insurance company reserve funds, comprehensive financial company CMAs, etc.) excluding deposits where the depositor is the government, public institutions, or insured financial companies. Insured deposits have steadily increased from 2,075.5 trillion KRW at the end of September 2018, 2,103.4 trillion KRW at the end of December 2018, 2,133.4 trillion KRW at the end of March 2019, to 2,156.2 trillion KRW at the end of June 2019.

By sector, bank insured deposits were the largest at 1,298.5 trillion KRW, followed by insurance at 795.4 trillion KRW, savings banks at 59.5 trillion KRW, financial investment at 29.3 trillion KRW, and comprehensive finance at 1.4 trillion KRW.

In the banking sector, individual insured deposits increased by 1.5% compared to the previous quarter, while corporate insured deposits rose by 2.2%. A KDIC official explained, "Corporate savings deposits increased by 2.7% compared to the previous quarter, indicating that corporate idle funds flowed into bank insured deposits."

The balance of insured deposits in the savings bank sector was 59.5 trillion KRW, up 3.8% from the previous quarter. This was mainly due to savings banks securing deposits by raising deposit interest rates in preparation for the loan-to-deposit ratio (LDR) regulation. Savings banks must maintain an LDR of 110% this year and 100% next year.

On the other hand, the balance of insured deposits (reserve funds) in the insurance sector was 795.4 trillion KRW, an increase of 1.1% from the previous quarter. The growth rate slowed due to stagnation in the insurance market.

Meanwhile, the KDIC collected 1.6 trillion KRW in deposit insurance premiums from insured financial companies in the first to third quarters of last year and accumulated 3.5 trillion KRW in the deposit insurance fund as of the end of June last year. As of the third quarter of last year, the number of insured financial companies totaled 311, an increase of 8 companies compared to the previous quarter.

This content was produced with the assistance of AI translation services.