[1mm Financial Talk] Banks Lowering Deposit Rates, Investment Enthusiasts Turning to Secondary Financial Institutions

As the Bank of Korea lowers its base interest rate, banks are gradually reducing their deposit interest rates, prompting "Yetek" (a combination of "deposit" and "investment") enthusiasts to turn to the secondary financial sector, which offers relatively higher interest rates. These individuals seem to be focusing on savings banks and mutual finance institutions, where deposit products with interest rates in the low 4% range are still available.

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According to the financial sector on the 29th, banks have recently started lowering deposit interest rates following the Bank of Korea's base rate cut. Among the five major commercial banks, NH Nonghyup Bank recently reduced deposit product interest rates by up to 0.55 percentage points, and Woori Bank by up to 0.20 percentage points. Other commercial banks and some regional banks have also adjusted their deposit interest rates.

Other commercial banks are also considering lowering deposit interest rates. Given that the average yield on 1-year bank bonds (AAA rating) fell to 3.195% as of the 25th, reflecting market interest rates is a natural outcome. A representative from a commercial bank said, "It is true that lowering deposit interest rates is burdensome amid rising household loan rates due to loan regulations," but added, "We cannot keep deposit rates disconnected from market interest rates indefinitely."

As deposit interest rates in the banking sector show signs of downward adjustment, Yetek enthusiasts are turning their attention to the secondary financial sector, which offers relatively higher interest benefits. For example, according to the Korea Federation of Savings Banks, the average interest rate on 1-year fixed deposits nationwide at savings banks was 3.63% as of the previous day, slightly higher than the five major commercial banks (3.35?3.42%, based on the Bank Federation).

Some savings banks are attracting customers by offering special promotional products with interest rates in the 4% range, which have recently disappeared. For instance, Accuon Savings Bank is selling a 1-year fixed deposit (compound interest) product called "First Encounter Deposit," offering up to 4.05% annual interest to new customers without prior deposit account history. JT Savings Bank also offers up to 4.0% annual interest on a 9-month fixed deposit (compound interest) product when subscribed to online.

Besides savings banks, agricultural and fisheries cooperatives, credit cooperatives, and Saemaeul Geumgo occasionally offer deposit products with interest rates in the 4% range, mainly through some local units. For example, as of the previous day, some Saemaeul Geumgo units such as Jongno Central and Bupyeong East are selling fixed deposit products with up to 4.0% annual interest. Some installment savings products also offer interest benefits in the low to mid-4% range. Yetek enthusiasts carefully approach these local units by sharing and reviewing their management indicators and ratings.

Demand deposit accounts (parking accounts) are also attracting attention as alternative investment options. SC First Bank recently launched the "SC First High Account," a parking account offering up to 4.0% annual interest. High-interest parking account products are also available in the savings bank sector. OK Savings Bank offers the "OK Jjantech Account," which provides up to 7.0% annual interest on deposits under 500,000 KRW, and JT Savings Bank sells the "JT Jump-up Ⅱ Savings Deposit," offering up to 3.80% annual interest on deposits under 10 million KRW.

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