Customers at Risk... Hana Bank's Deposit Interest Rates Soar in Just One Month

Non-face-to-face Regular Deposit Interest Rate Increased by 0.2%P to 0.8%
Adjusted to Be Similar to Other Commercial Banks' Rates

[Asia Economy Reporter Kim Min-young] Hana Bank raised the interest rate on its non-face-to-face fixed deposit product again just over a month after lowering it. The bank had cut the rate by 0.5 percentage points around the time of the Bank of Korea's big rate cut, but fearing excessive adjustment and customer attrition, it is interpreted as aligning its rates with other banks.

According to the financial sector on the 6th, Hana Bank raised the interest rate of the ‘Hana OneQ Fixed Deposit’ from 0.60% to 0.80%, an increase of 0.20 percentage points, on the 29th of last month. This product is a one-year maturity product that can be subscribed to through the mobile banking application (app) Hana OneQ.

Following the Bank of Korea's big cut, the rate was lowered from 1.10% to 0.60%, a 0.50 percentage point drop, on the 1st of last month, but less than a month later, it reversed to an increase. Hana Bank stated, “The rate was raised to support customers using non-face-to-face product channels due to the novel coronavirus disease (COVID-19).”

In the financial sector, this rate hike by Hana Bank is interpreted as a move to retain existing customers. Since March, other major banks have lowered their non-face-to-face fixed deposit rates by 0.20 to 0.45 percentage points, which was a smaller reduction compared to Hana Bank.

Shinhan Bank lowered the interest rate of its ‘SOL Convenient Fixed Deposit’ from 1.35% to 1.10% on March 11, and then further reduced it to 0.90% on the 16th of last month.

Woori Bank also lowered the interest rate of its ‘WON Deposit’ by 0.10 percentage points each in March and April, and the ‘Wonmoa Deposit’ rate was lowered by 0.45 percentage points in two rounds. Kookmin Bank and NongHyup Bank lowered their non-face-to-face product rates by 0.20 percentage points and 0.30 percentage points, respectively.

Deposit interest rates are most influenced by the base rate but can be partially determined autonomously by banks. According to the Korea Federation of Banks, deposit interest rates are decided comprehensively considering the base rate, the bank’s fund holding status, management policies such as marketing strategies, and financial market conditions.

In the secondary financial sector, a ‘game of nerves’ over deposit interest rates is also intensifying. SBI Savings Bank, the industry leader in asset size, raised its one-year fixed deposit interest rate by 0.30 percentage points to offer 2.00%. If subscribed through its mobile banking app ‘Cider Bank,’ an additional 0.10 percentage points is added, providing a maximum of 2.10%. In response, OK Savings Bank, the industry’s second largest, also raised the interest rate of its ‘OK Safe Fixed Deposit’ from 1.90% to 2.10%.

A financial sector official said, “Customers who lock in large sums in fixed deposits are very sensitive to interest rates and may switch financial institutions even if there is only a 0.10 percentage point difference,” adding, “After the base rate cut, major banks lowered deposit rates but are now anxious about losing existing customers.”

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