"Not Below 4%"... The Era of 5% Savings and 6% Installment Savings Begins

50 Trillion Won Poured into Savings and Deposits at 5 Major Banks This Month
Interest in High-Interest Deposit Products Rises Amid Continued 'Money Move' Trend

The Monetary Policy Committee of the Bank of Korea held a meeting on the 12th to decide on the direction of monetary policy and decided to raise the base interest rate, currently at 2.50%, by 0.50 percentage points in one go, a 'big step' increase. On the same day, a notice of today's interest rate was posted on the exterior wall of a commercial bank in downtown Seoul. Photo by Moon Honam munonam@

[Asia Economy Reporter Minwoo Lee] As deposit interest rates approach 5%, capital movement is accelerating further. With the base interest rate continuing to rise unabated and the asset market also fluctuating, this trend is expected to persist.

According to the financial industry on the 14th, banks are rapidly raising deposit interest rates. This is in response to the Bank of Korea's 'big step' of raising the base interest rate by 0.5 percentage points at once on the 12th, marking the second such move in three months.

Shinhan Bank and NH Nonghyup Bank raised their deposit interest rates starting today. Shinhan Bank decided to raise fixed deposit rates by up to 0.8 percentage points and installment savings by up to 0.7 percentage points. Nonghyup Bank plans to increase deposit rates by 0.5 percentage points and installment savings by up to 0.7 percentage points. Woori Bank also raised deposit and installment savings rates by up to 1 percentage point on the 13th.

As a result, deposit products with interest rates in the mid-4% range are emerging one after another. According to the Korea Federation of Banks, the highest interest rate among fixed deposit products at commercial banks is SC First Bank's 'e-Green Save Deposit.' If all preferential conditions are met, it offers an annual interest rate of 4.70%. Internet-only bank K Bank also raised the maximum interest rate of its 'Code K Fixed Deposit' to 4.60%. Products with interest rates in the 4.5% range have appeared at Woori Bank, Shinhan Bank, SH Suhyup Bank, and others. Installment savings products with annual interest rates in the 6% range (Jeonbuk Bank, JB Card Jetaek Savings) have also appeared.

Savings banks urgently seeking funds have introduced even more aggressive products. Following Yegaram Savings Bank's 'e-Fixed Deposit' (5.15%), Dongwon Jeil Savings Bank (5.10%), Korea Investment Savings Bank (5.10%), Dongwon Jeil Savings Bank (5.10%), and HB Savings Bank (5.00%) are already offering interest rates in the 5% range. Korea Investment Savings Bank is also offering installment savings product interest rates up to 6% (based on 6 months).

As further base interest rate hikes are expected, capital movement into bank deposits and installment savings is likely to continue. According to the financial market trends announced by the Bank of Korea the day before, as of the end of September, the deposit balance at deposit banks increased by 36.4 trillion won compared to the previous month. Of this, the increase in fixed deposits alone reached 32.5 trillion won, marking the largest increase since related statistics began in January 2002.

In particular, this trend has been gaining momentum recently. The deposit and installment savings balances of the five major commercial banks?KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup?have increased by more than 50 trillion won in just over ten days this month, reaching 811.8041 trillion won as of the 12th. This is the first time the deposit and installment savings balances of the five major banks have exceeded 800 trillion won in history.

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