Soaring Bank Interest Rates... Deposits Increase by 30 Trillion Won in One Month, Household Loans Decline for Nine Consecutive Months

Five Major Banks' Time Deposits Reach 760.5 Trillion KRW
Increase of 30.7 Trillion KRW in One Month
Time Savings Accounts Near 40 Trillion KRW This Year

Household Loans at 694 Trillion KRW, Declining for 9 Consecutive Months
Credit Loans Decrease by 2 Trillion KRW in One Month to 125 Trillion KRW
Jeonse Loans Show Lowest Monthly Increase This Year

Applications for the preferential-type Safe Conversion Loan, which converts variable-rate mortgage loans to long-term fixed rates starting at an annual rate of 3.7%, began on the 15th. On that day, a bank in downtown Seoul was quiet. Photo by Moon Honam munonam@

[Asia Economy Reporter Song Seung-seop] As the base interest rate rises, bank deposit interest rates have soared, attracting more than 30 trillion won in funds. On the other hand, the credit loan sector has shrunk by about 2 trillion won, declining for nine consecutive months.

According to the financial sector on the 4th, the total amount of time deposits at the five major banks?KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup?was recorded at 760.5044 trillion won at the end of last month. This is an increase of 30.6838 trillion won from 729.8206 trillion won the previous month. Compared to the same month last year, which was 632.417 trillion won, it increased by 128.0874 trillion won (20.2%).

For installment savings, the amount rose by 586.9 billion won to 39.3097 trillion won, approaching the 40 trillion won mark. The representative short-term deposit product, the “Market Interest Rate Demand Deposit Account (MMDA),” reached 112.2552 trillion won, increasing by 2.7101 trillion won in one month. Conversely, demand deposits decreased by 9.3846 trillion won to 617.216 trillion won compared to the previous month.

The total deposit balance, including other items, recorded 1,853.2764 trillion won. This is 18.4504 trillion won more than a month ago and 127.5014 trillion won more than the previous year.

The rapid increase in deposit balances is the result of commercial banks sharply raising deposit and installment savings interest rates. Commercial bank deposit rates have already surpassed the 5% annual mark. Woori Bank’s 'WON Corporate Time Deposit' product offers an interest rate of 4.92% for one year, but exceeds 5.00% for terms over 20 months. The highest rate is 5.03% for a two-year subscription. Other banks have also launched deposit products with interest rates in the high 4% range.

On the other hand, in the loan sector, soaring loan interest rates have led to a noticeable decline in household loans. The household loan balance at the end of last month was 695.083 trillion won, down 1.3679 trillion won from 694.4509 trillion won the previous month. It decreased by 8.078 trillion won compared to a year ago. Household loans have been declining for nine consecutive months this year.

Household credit loans have also been shrinking every month since January. Household credit loans, which were 127.6139 trillion won in August, decreased by 2.0519 trillion won in one month to 125.562 trillion won. The lower limit of credit loan interest rates has exceeded 5%, and the upper limit has surpassed 6.8%. With expectations of 7-8% interest rates within the year, salaried workers with surplus funds are believed to have rapidly repaid their credit loans.

Jeonse (key money) loans recorded 134.1976 trillion won. At the beginning of the year, monthly increases exceeded 1 trillion won, but due to rapid interest rate hikes, the increase itself is gradually slowing. Last month, it increased by 289.6 billion won compared to the previous month, the lowest monthly increase this year. Mortgage loans rose by 1.0754 trillion won from the previous month to 508.3777 trillion won.

Loans to large corporations amounted to 100.4823 trillion won, and loans to small and medium-sized enterprises were 594.4167 trillion won. Both increased by 3.7332 trillion won and 3.7387 trillion won respectively compared to the previous month.

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