▲ File Photo
With market interest rates rising on expectations of a benchmark interest rate hike, time deposit rates at major commercial banks are climbing back into the 3% range.
As corporate standby funds swell due to robust semiconductor exports and concerns over deposit outflows grow amid a "money move" triggered by a stock market boom, banks are scrambling to retain funds by offering high-interest deposits.
According to the Korea Federation of Banks' consumer portal, as of June 12, the maximum interest rates (based on a one-year maturity) for flagship time deposit products at the five major banks (KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup) stood at 2.90 to 3.00 percent per annum.
The upper limit has risen by 0.05 percentage points (p) compared to a month ago.
Shinhan Bank's "Shinhan My Plus Time Deposit" offered the highest maximum rate at 3.00 percent, followed by NH Nonghyup Bank's "NH All-One e-Deposit" at 2.95 percent, while KB Kookmin Bank's "KB Star Time Deposit," Hana Bank's "Hana Time Deposit," and Woori Bank's "WON Plus Deposit" each offered 2.90 percent.
The maximum interest rate, which combines each bank's base deposit rate with preferential rates, is close to the actual rate applied to financial consumers.
The number of time deposit products offering maximum interest rates in the 3 percent range is expected to gradually increase going forward.
According to the Bank of Korea's Economic Statistics System, the weighted average interest rate on time deposits (one-year maturity) at deposit-taking banks in April of this year stood at 3.04 percent per annum, climbing back into the 3 percent range for the first time in 15 months since January of last year (3.06 percent).
Some commercial and regional banks are already offering maximum rates in the mid-3 percent range.
Notable examples include SC First Bank's "e-Green Save Deposit" (maximum 3.65 percent per annum), Jeonbuk Bank's "JB 123 Time Deposit" (3.70 percent), and Kwangju Bank's "Good Start Deposit" (3.67 percent).
This shift is interpreted as reflecting the rise in market interest rates driven by expectations of a benchmark rate hike.
According to the Korea Financial Investment Association's Bond Information Center, the yield on one-year bank bonds rose by 0.364 percentage points from 3.221 percent on May 13 to 3.585 percent on June 12.
During the same period, the yield on five-year bank bonds also rose by 0.132 percentage points from 4.137 percent to 4.269 percent.
The rise in market interest rates is also being reflected in lending rates.
As of June 12, the mixed-type (fixed) mortgage rates at the five major banks (based on five-year bank bonds) ranged from 4.46 to 7.49 percent per annum, with the upper limit nearing 7.5 percent.
Personal credit loan rates also exceeded 6 percent at the upper limit, ranging from 4.39 to 6.05 percent per annum (based on Grade 1 credit and a one-year maturity).
Amid this situation, banks are making noticeable moves to attract surplus corporate funds—which are overflowing due to record-high exports—into time deposits.
According to financial industry sources, the total balance of Money Market Deposit Accounts (MMDAs) at the five major banks was tallied at 147.69 trillion won as of June 11.
MMDA balances, which are widely used by corporations to park short-term surplus funds, surpassed 150 trillion won for the first time in history last month but have plummeted by 9.97 trillion won so far this month.
Even though less than half the month has passed, this marks the largest decline in about two years since July 2024 (-14.66 trillion won).
On the other hand, time deposits showed an upward trend for the second consecutive month.
The time deposit balance at the five major banks reached 948.83 trillion won as of June 11, up 4.12 trillion won from the end of May.
This maintained a robust growth trend following the previous month's increase of 7.53 trillion won.
Industry insiders analyze that the decrease in MMDA balances—commonly referred to as corporate "parking accounts"—and the increase in time deposit balances are closely linked.
A commercial bank official said, "We assessed that about 40 percent of MMDA funds were at risk of leaving the bank. To retain these funds, we are offering competitive interest rates on short-term time deposits of less than a year for corporate clients."
Another bank official noted, "Although time deposit balances for individual customers decreased this month, the overall time deposit balance increased because we successfully attracted corporate funds."
They added, "With the recent rise in the share of demand deposits and MMDAs, there were concerns that large-scale fund outflows could occur at any time. In this period of rising interest rates, the need to secure funds for lending and operations has also grown."
He further explained, "Compared to regular demand deposit accounts, MMDAs also require paying relatively high interest. Therefore, shifting these funds into time deposits, which lock up capital for a set period, does not impose a significant cost burden on banks."
(Photo: Yonhap News)
※ Please note: This article was translated by AI and may contain errors.