Despite the Bank of Korea's key rate cut, savings bank deposit rates rose, settling back in the 3 percent range for the first time in three months. This is because savings banks, whose received balances have recently decreased significantly, have raised deposit rates to defend their balances. While deposit rates in the banking sector are falling every day, some say that "Moneymove" will accelerate as a savings bank that maintains high interest rates. However, the fact that the loan business has deteriorated due to recent loan regulations is considered a variable.
According to the Korea Federation of Savings Banks on the 14th, interest rates on one-year deposits at 79 savings banks averaged 3.00 percent per year. Deposit rates have collapsed in the 3% range annually since the end of March, but have gradually increased since May. In fact, the average interest rate, which recorded 2.96% annually in May, rose slightly to 2.97% in June and then to 3.0% in July. Considering that the Bank of Korea's benchmark interest rate fell 0.5 percentage points from 3.0% a year earlier this year to 2.5% in May, the savings bank interest rate has "reversed."
Savings banks, which are in urgent need of funds, have started to attract customers by using high-interest products. Cheongju Savings Bank provides up to 3.4% annual interest at the interest rate for term deposits, which is about 1.0% higher than the banking sector, which provides interest rates of around 2.5%. In addition, JT and Dall deposit products provide interest rates of 3.26% per year and smart savings banks provide interest rates of 3.25%, respectively. SBI Savings Bank sold a 3.85% annual "Lee Dong-eun Professional Winning Savings," which provides relatively high interest rates compared to the banking sector, and OK Savings Bank also released a 20% high-interest "storage savings."
Analysts say that savings banks are a strategy to defend against the recent significant decline in their received balances. According to the Bank of Korea's economic statistics system, the total receivable balance of savings banks stood at 98.3941 trillion won as of April, the lowest level since 98.6843 trillion won in November 2021. Compared to this time and two years ago in 2023, it is down 14.2%. The same goes for the balance of the credit. As of April this year, it was 95.8752 trillion won, the lowest since 95.5783 trillion won in October 2021.
An official from the savings banking sector said, "It is difficult to see it as a trend reversal, but the interest rate on reception seems to have risen slightly for the purpose of defending reception and managing liquidity."
As the deposit protection limit will be raised from 50 million won to 100 million won in all financial sectors from September, some analysts say that the second financial sector, which has relatively high interest rates, could benefit greatly. In particular, it is predicted that funds can naturally come over if savings banks maintain higher interest rates compared to banks. In the case of the second financial sector, there were many customers who attracted funds in accordance with the depositor protection limit, and it is analyzed that if the limit amount goes up, additional funds may flow in accordingly.
It is a problem that the household debt management policy creates major restrictions on the loan business. This is because when receiving credit loans due to the June 27 loan regulation, the entire financial sector was added together and changed only within the borrower's annual income. In particular, it is analyzed that many of the credit loan customers in the second financial sector, such as savings banks, have more debt than annual income, making it difficult to borrow due to regulations. In other words, the project financing (PF) market has frozen due to the sluggish real estate market, reducing loan operations, but it has become more difficult.
The savings banking sector also held a meeting with industry executives to respond to measures to strengthen the government's household debt management. At the meeting, it was reported that the damage to the financially vulnerable group in need of emergency living funds could be large and that the reduction of the total amount of household loans was eased.
"We believe that the actual savings bank's credit loan market has shrunk a lot," a savings bank official said. "We predict that it will be difficult to expand the credit loan sector in the future."
"Due to the worsening economic situation, the savings banking industry has tended to handle new loans conservatively," another official said. "Lending regulations are expected to lead to a decline in loans, with total daily loans halving."
