Clearer Preference for Safe Assets... Protected Deposits Increase 3.4% in Q2

Increased by 80.5 trillion won compared to 3 months ago
Growth rate steady in 3% range with 3.9% in Q1 and 3.4% in Q2 this year

[Asia Economy Reporter Park Sun-mi] Due to economic uncertainty caused by the spread of the novel coronavirus infection (COVID-19), there has been an increased preference for safe assets, leading to a significant rise in the amount of insured deposits protected for depositors.

According to the "Insured Deposits Trend as of the End of June 2020" announced by the Korea Deposit Insurance Corporation on the 22nd, the total insured deposits as of the end of June this year (end of Q2) amounted to 2,419.5 trillion KRW, marking a 3.4% increase compared to the end of the previous quarter. This represents an increase of 80.5 trillion KRW over three months. Compared to the average quarterly increases of 1.0% and 1.7% in total insured deposits in 2018 and 2019 respectively, the 3.4% increase at the end of Q2 this year reflects a sharp upward trend.

Insured deposits refer to deposits protected by the Korea Deposit Insurance Corporation (including bank and savings bank deposits, investor deposits at financial investment firms, insurance company reserve funds, and CMA accounts at comprehensive financial investment business entities), excluding deposits where the depositor is the government, local governments, or insured financial institutions.

In particular, the increase in demand deposits due to the rise in standby funds and the increase in savings deposits driven by demand for safe assets have prominently contributed to the growth of insured deposits in the banking and savings bank sectors.

Bank insured deposits increased by 4.5% at the end of June this year compared to the end of the previous quarter, compared to average quarterly increases of 0.9% and 2.1% in 2018 and 2019 respectively. By category, demand deposits (244 trillion KRW) rose by 9.6% (21.4 trillion KRW), savings deposits (1,106.6 trillion KRW) increased by 3.2% (34.1 trillion KRW), and foreign currency deposits (94.2 trillion KRW) grew by 10.0%.

Insured deposits at savings banks also rose by 6.4% at the end of June this year compared to the end of the previous quarter, compared to average quarterly increases of 3.5% and 1.5% in 2018 and 2019 respectively.

Additionally, due to the activation of stock investment, insured deposits (investor deposits) at financial investment firms increased by 9.1% compared to the end of the previous quarter. On the other hand, insurance companies’ insured deposits, namely reserve funds, showed a slowed growth rate, increasing by only 1.0% compared to the end of the previous quarter, influenced by stagnation in the domestic insurance market and an increase in policy cancellations due to economic downturn.

Meanwhile, as of the end of June, the total number of insured financial institutions was counted at 320.

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