South Korean bank deposit rates rise as base rate hits 3%

As the base interest rate reaches 3% per annum, South Korean commercial banks are increasing interest rates on savings and installment deposit products. According to the Korea Federation of Banks, the average base rate for 12-month fixed deposits is 2.91%, while the maximum rate including preferential benefits averages 3.35%.

This upward trend is driven by increased market volatility and a growing preference for safe assets, leading to a phenomenon where funds move from the stock market back into bank deposits. Major institutions, including Shinhan Bank, KB Kookmin Bank, Woori Bank, Hana Bank, and Nonghyup Bank, have all implemented rate hikes ranging from 0.15 to 0.3 percentage points to compete for customer deposits.

Data from the Bank of Korea shows that the average interest rate for savings deposits rose to 3.21% in July, a 0.31 percentage point increase from the end of last year, outpacing the rise in loan interest rates. This shift is reflected in rising deposit balances, which grew by 91.7 trillion won in the first half of the year.