Eyeing 3.5% Per Annum... Five Major Banks Raise Deposit Rates One After Another

One-Year Fixed Deposit Rates at Five Major Banks Reach 3.2% to 3.45% Per Annum
Benchmark Rate Hikes Push Up Bank Debenture Yields
Intensified Bank Competition Amid 'Reverse Money Move'

As the fixed deposit rates at the five major commercial banks (KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup Bank) rise, the annual rate for a one-year term deposit is now approaching 3.5%. This trend is driven both by the Bank of Korea’s benchmark rate hikes—which have pushed up market rates—and the heightened market volatility in the stock market. As a result, competition to attract deposits has intensified as banks respond to the 'reverse money move', where funds flow from the stock market to banks.

According to the financial sector as of September 11, NH Nonghyup Bank raised its fixed deposit rates by 0.2 to 0.3 percentage points depending on the deposit term, starting this day. The rate for 6-month short-term deposits increased from 3.05% to 3.25%, and the rate for one-year term deposits rose from 3.25% to 3.45%, each up by 0.2 percentage points. The two-year long-term deposit rate was also raised by 0.3 percentage points, from 2.7% to 3.0%.

Hana Bank also increased its fixed deposit rates starting the previous day, raising the rate for its one-year ‘Hana Term Deposit’ from 3.2% to 3.3%—an increase of 0.1 percentage points. Woori Bank raised its one-year ‘WON Plus Deposit’ rate from 3.2% to 3.4% the previous day. Its two-year term deposit rate jumped by 0.5 percentage points, from 2.5% to 3.0%.

Previously, on September 9, Shinhan Bank raised its one-year ‘Solpyeonhan Fixed Deposit’ rate by 0.2 percentage points, from 3.2% to 3.4%. KB Kookmin Bank is reportedly considering raising its ‘KB Star Fixed Deposit’ rate. Back on July 22, Kookmin Bank had already raised the one-year fixed deposit rate by 0.3 percentage points, from 2.9% to 3.2%.

The increases in fixed deposit rates at major commercial banks are attributed to rising market rates and increased competition for deposits. The Bank of Korea raised its policy rate twice in succession in July and August, pushing it up to 3.0%, and signaled a median rate forecast of 3.25% for six months into the future through its dot plot, which also led to an increase in the bank debenture rates (the benchmark for deposit rates). According to Korea Financial Investment Association's Bond Information Center, the AAA-rated one-year bank debenture rate—which serves as the benchmark for one-year deposits—rose from 3.660% on August 10 to 3.858% on September 10, an increase of 0.198 percentage points.

Banks appear determined not to lag behind in deposit competition with government policy banks, foreign banks, internet-only banks, and regional banks, which are offering relatively higher deposit rates. For a one-year term, Korea Development Bank’s ‘KDB Fixed Deposit’ offers 3.6% per annum, SC First Bank’s ‘e-Green Save Deposit’ pays 3.85% per annum. Among internet-only banks, K Bank’s ‘Code K Fixed Deposit’ offers 3.61% per annum, while KakaoBank and Toss Bank each provide 3.60%. Among regional banks, Jeonbuk Bank’s ‘JB Direct Deposit Account’ provides 3.76% per annum for a one-year term without preferential conditions, and BNK Kyongnam Bank’s ‘The Dunden Deposit’ offers 3.85% per annum if certain conditions are met.

A banking industry official stated, “With deposit rates rising and the stock market remaining stagnant, a lot of funds are shifting into deposits. Competition among banks for deposit interest rates is expected to continue for the time being.”

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