Time Deposits at Five Major Banks Drop by 4 Trillion Won... Investment Standby Funds Surge by 26 Trillion Won

원본보기 아이콘

The balance of time deposits at major commercial banks has dropped by more than 4 trillion won. This is interpreted as some funds flowing into the stock market as the stock market strengthens, driven by expectations for government stock market stimulus measures.

As of the end of September, the time deposit balance at the five major commercial banks-KB Kookmin, Shinhan, Woori, Hana, and NH Nonghyup-stood at 950.7015 trillion won. This represents a decrease of 4.0304 trillion won compared to the previous month (954.7319 trillion won). This is the first time in three months, since the end of June, that the deposit balance has declined.

The drop in deposit rates to the level of the base interest rate and the strong performance of the domestic stock market are seen as reasons for funds shifting into stock investments. In fact, according to the Korea Financial Investment Association, as of September 30, investor deposits stood at 76.4473 trillion won, an increase of 10.1481 trillion won compared to the end of August. According to the Korea Federation of Banks, the interest rates for the main time deposit products at the five major banks are between 2.5% and 2.55%, barely above the base interest rate.

An official at one of the commercial banks explained, "It can be interpreted that customers whose time deposits have matured are choosing not to renew them and are instead turning their attention to the stock market and other investment options," adding, "These days, there are also cases where funds move temporarily for purposes such as preparing for initial public offering (IPO) subscriptions."

The balance of demand deposits, including money market deposit accounts (MMDA), which are low-cost savings accounts, was 669.7238 trillion won, up 26.0154 trillion won from the previous month (643.7084 trillion won). Although the interest rates on demand deposits are lower than those of regular deposits, they offer the advantage of allowing withdrawals and deposits at any time. For this reason, they are classified as 'investment standby funds' as they facilitate easy movement of funds into investment assets such as securities and real estate.

The increase in demand deposits is attributed to seasonal factors such as the Chuseok holiday, as well as expectations for a base interest rate cut. Some analysts also interpret this as funds accumulating in banks as investors wait to make new investments in real estate and securities after a rate cut.

원본보기 아이콘

The balance of installment savings at the five major banks stood at 45.3546 trillion won, an increase of 1.0809 trillion won from the previous month, while the total deposit balance rose by 10.3095 trillion won over the month to reach 2,142.0675 trillion won.

© The Asia Business Daily(www.asiae.co.kr). All rights reserved.