[Financial Essay] Which Savings Banks Offer 2% Interest on Deposits?

[Asia Economy Reporter Kim Min-young] The deposit interest rates at savings banks, which had been falling endlessly, are rising again. As customers disappointed with the annual deposit interest rates in the low to mid 1% range began to leave, causing a significant outflow of deposits, savings banks have started raising interest rates to retain their customers. The previously vanished 2% range deposit interest rates are beginning to reappear one after another.

According to the industry on the 4th, SBI Savings Bank, the industry leader by assets, offers a 1-year fixed deposit interest rate of 1.90% per annum. Through two recent rate hikes, it raised the rate from 1.60% to 1.90%, an increase of 0.3 percentage points.

OK Savings Bank also raised its deposit interest rate by 0.4 percentage points to 1.90%, matching SBI Savings Bank’s rate.

Welcome Savings Bank increased its fixed deposit interest rate from 1.60% to 1.80%, a 0.2 percentage point rise. Mid-sized JT Savings Bank also offers a fixed deposit interest rate of 1.80%.

Mid-sized and smaller savings banks also offer higher non-face-to-face fixed deposit interest rates. As of this date, Kiwoom Yes Savings Bank offers a 2.26% interest rate on 1-year maturity products. Following that, Dongwon Jeil Savings Bank and Woori Savings Bank provide 2.20%, while Korea, Sky, Heungkuk, and Seram Savings Banks offer 2.10% interest rates.

As of this date, the average fixed deposit (1-year maturity) interest rate across 79 savings banks nationwide is 1.77%.

In the first half of this year, influenced by the Bank of Korea’s base rate cuts, savings banks also consecutively lowered their interest rates, causing deposit rates to fall to the low to mid 1% range.

Why did savings banks raise fixed deposit interest rates? Industry insiders agree that the recent IPO subscription boom in the stock market caused deposit funds to flow from savings banks into the stock market. Between the 1st and 2nd of last month, when Kakao Games’ IPO subscription took place, more than 50 billion KRW in deposits left just one savings bank, A Savings Bank. A representative from this savings bank said, “Although over 95% of the funds returned after the subscription ended, the sudden outflow of funds made the management feel a sense of crisis.” The IPO boom unexpectedly brought management difficulties to savings banks.

Additionally, many high-net-worth individuals who came to savings banks expecting high-interest deposits were reportedly disappointed by the low rates.

An industry insider said, “It is difficult to maintain deposit interest rates above 2% in this ultra-low interest rate era,” but added, “To retain customers who are about to leave, savings banks have no choice but to offer higher interest rates than commercial banks, which is why they are raising rates.”

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