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 time deposit rates of the five major commercial banks (KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup Bank) rise, the annual interest rate for a one-year maturity is approaching 3.5 percent. This trend is the result of market interest rates increasing due to the Bank of Korea's rate hikes, as well as intensifying competition for deposits from banks aiming to attract funds amid heightened volatility in the stock market, a phenomenon known as a 'reverse money move.'

According to the financial sector on September 11, NH Nonghyup Bank raised its time deposit rates by 0.2 to 0.3 percentage points depending on the deposit term, effective from today. The rate for a six-month short-term deposit increased from 3.05 percent to 3.25 percent, while the one-year time deposit rose from 3.25 percent to 3.45 percent, with both up by 0.2 percentage points. The two-year long-term deposit was also raised by 0.3 percentage points, from 2.7 percent to 3.0 percent.

Hana Bank also raised its time deposit rates starting the previous day, with the one-year 'Hana Time Deposit' rate increasing by 0.1 percentage point from 3.2 percent to 3.3 percent. Woori Bank likewise raised the one-year 'WON Plus Deposit' rate from 3.2 percent to 3.4 percent. The two-year time deposit rate jumped by 0.5 percentage point, from 2.5 percent to 3.0 percent.

Previously, on September 9, Shinhan Bank raised the one-year 'Sol Flexible Time Deposit' rate by 0.2 percentage point, from 3.2 percent to 3.4 percent. KB Kookmin Bank is currently reviewing a potential rate increase for the 'KB Star Time Deposit.' In the past, on July 22, Kookmin Bank raised its one-year time deposit rate by 0.3 percentage point, from 2.9 percent to 3.2 percent.

The increase in time deposit rates at major commercial banks is attributed to both the rise in market interest rates and intensified competition for deposits. The Bank of Korea raised its policy rate twice in a row in July and August, bringing it to 3.0 percent, and indicated a median rate forecast of 3.25 percent for six months ahead through its dot plot. As a result, the benchmark rate for bank bonds, which serves as an indicator for time deposits, also rose. According to the Korea Financial Investment Association's Bond Information Center, the 1-year AAA-rated bank bond—which acts as the benchmark for one-year time deposit rates—rose by 0.198 percentage point, from 3.660 percent on August 10 to 3.858 percent on September 10.

Banks also appear determined not to fall behind in the competition for deposits against policy banks, foreign banks, internet-only banks, and regional banks, which offer relatively high deposit rates. For a one-year maturity, Korea Development Bank's 'KDB Time Deposit' rate is 3.6 percent per annum, and Standard Chartered Bank Korea’s 'e-Green Save Deposit' is at 3.85 percent per annum. Among internet-only banks, K Bank’s 'Code K Time Deposit' offers 3.61 percent per annum, while both KakaoBank and Toss Bank offer 3.60 percent per annum for their one-year time deposits. Among regional banks, Jeonbuk Bank's 'JB Direct Deposit Account' offers 3.76 percent per annum for a one-year term with no preferential conditions, and BNK Kyongnam Bank’s 'The Reliable Deposit' offers up to 3.85 percent per annum when meeting preferential requirements.

An industry official commented, "With deposit rates on the rise and the stock market moving sideways, a significant amount of funds is shifting into deposits. The competition among banks for deposit rates is expected to continue for some time."

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