"Where to Deposit Maturity Funds"...5 Major Banks See Demand Deposits Increase After 3 Months

Demand Deposit Balance of 608 Trillion Won Last Month... 10 Trillion Won Increase from Previous Month
Impact of Increased Waiting Funds Due to High-Interest Deposit Maturities
Rising Urgent Sale Demand Amid Real Estate Market Recovery

The demand deposit balances at the five major commercial banks, which had decreased by more than 25 trillion won over the past two months, are showing signs of recovery. This appears to be due to an increase in standby funds seeking new investment destinations as high-interest deposits mature.

According to the five major commercial banks (KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup) on the 5th, the demand deposit balances at these banks amounted to 608.1349 trillion won last month. This is an increase of 10.1698 trillion won compared to the previous month (597.9651 trillion won). This figure had been declining since June (623.8731 trillion won). In July, it sharply dropped by 23 trillion won to 600.4492 trillion won in just one month, and in August (597.9651 trillion won), it fell below 600 trillion won for the first time since January this year. Last month marked a turnaround with an increase after three months.

Demand deposits are deposits that allow free withdrawals and deposits, with typical examples including regular deposits, salary accounts, and MMDA (Money Market Deposit Accounts). From the banks' perspective, these are core deposits or low-cost deposits because they can raise funds at a low interest rate of 0.1?0.3% per annum.

The rebound in demand deposit balances is attributed to the maturity of high-interest deposits. The maturities of bank time deposits sold last October at high interest rates of 4?5% per annum began last month, and as banks raise deposit interest rates to retain matured funds, standby funds have increased. A representative from a commercial bank explained, “Banks are gradually raising deposit interest rates, so the number of customers temporarily waiting to invest in high-interest products has increased.”

Banks have raised the interest rates on major time deposits from the 3% range earlier this year to the 4% range. As of this date, NH Nonghyup Bank’s ‘NH All One e-Deposit’ and Woori Bank’s ‘WON Plus Deposit’ offer 4.05% per annum (based on the highest interest rate), and Shinhan Bank’s ‘Solpyeonhan Time Deposit’ applies an interest rate of 4.03% per annum. KB Kookmin Bank’s ‘KB Star Time Deposit’ and Hana Bank’s ‘Hana’s Time Deposit’ also offer an interest rate of 4.0% per annum.

There is also a view that this is related to the recovery of the real estate market. It is explained that as real estate transactions increase recently, large sums of money are flowing into demand deposits for balance payments or quick sales. Another commercial bank official said, “Real estate contracts have increased over the past month or two, and since the current market is showing mixed trends, it seems that some demand is placing funds in demand deposits while watching the market, aiming for quick sales.”

[Image source=Yonhap News]

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