[Financial Essay] Money Flowing into Savings Banks

[Asia Economy Reporter Kim Min-young] Money is flowing into savings banks. Deposits and savings entrusted to savings banks have surpassed 70 trillion won. This is interpreted as an increase in interest rate nomads who entrust their money to savings banks in pursuit of slightly higher interest rates under the ultra-low interest rate policy.

According to the Bank of Korea Economic Statistics System on the 23rd, as of the end of June, the total deposit balance of domestic savings banks was 70.708 trillion won.

This is an increase of 17.4% (10.4784 trillion won) compared to one year ago. Following surpassing 60 trillion won in June last year, it exceeded 70 trillion won in one year. It is the first time in about nine years since August 2011 that savings bank deposits have exceeded 70 trillion won.

In particular, deposits increased sharply in the second quarter.

Compared to the previous month, 1.4016 trillion won surged in April, followed by 1.5946 trillion won in May, and 960 billion won in June. The increase over three months is close to 4 trillion won.

This is due to the Bank of Korea lowering the base interest rate to 0.5% in May, causing commercial bank deposit interest rates to fall below 1% annually for the first time ever.

Although savings bank deposit interest rates are also at historically low levels (around 1% annually for deposits, low 2% range annually for savings), they remain higher than commercial banks, attracting many investors seeking slightly higher interest rates.

According to the Korea Federation of Savings Banks, as of June 1, the average 12-month fixed deposit interest rate of 79 savings banks was 1.91% annually. The 12-month savings interest rate averaged 2.50% annually. As of the 22nd, the deposit interest rate averaged 1.64%, and savings 2.38%. Although interest rates have slightly decreased over two months, they are still considered more attractive than commercial banks in terms of interest rates.

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