As the Bank of Korea raised the base rate from 0.75% to 1% on the 25th, banks are raising interest rates on deposits and savings accounts one after another. Banks raised interest rates on deposits and savings accounts up to 0.4 percentage points, which exceeds the base rate hike. It is interpreted that the concerns of the financial authorities that “banks are pursuing excessive loan-to-deposit interest rate differences” acted.
According to the banking industry on the 26th, Hana and Woori Banks raised interest rates on major savings and savings products by up to 0.4 percentage points from the same day. Hana Bank raised interest rates on five products, including the ‘Main Transaction Hana Monthly Compound Interest Savings’, by 0.25 to 0.40 percentage points from the day of subscription. Woori Bank also raised interest rates for 19 time deposits and 28 savings accounts from the same day by 0.25 to 0.40 percentage points. The interest rates on the three free-to-deposit deposits will also be raised by 0.1 to 0.15 percentage points.
Kookmin Bank and Shinhan Bank plan to raise interest rates on major products by up to 0.4 percentage points from the 29th. At Kookmin Bank, the 3% annual commercial bank savings, which disappeared during the ‘base rate of 0%’, will be revived. This is because the maximum interest rate based on the 3-year maturity of the non-face-to-face KB companion happy savings account will rise to 3.10% per annum. A Shinhan Bank official explained, “We plan to release a term deposit related to ESG (environment, social and governance) with an annual interest rate of 1.8% in early next month.”
Bank deposit rates usually move in the same range as the base rate. It is a structure in which the final interest rate is presented to consumers by adding preferential interest rates according to various conditions to the basic interest rates for deposits and savings accounts that reflect the base rate. However, this time, the bank is raising the deposit rate beyond the base rate hike.
In the second half of this year, banks raised interest rates on loans and raised interest rates on deposits ‘tidly’ for reasons such as restrictions on the total amount of household loans. Then, accusations poured in that “the bank is taking profit”, and the financial authorities began to intervene verbally. Recently, Jeong Eun-bo, head of the Financial Supervisory Service, said, “We will look into the reason why the difference between banks’ loan-to-deposit interest rates has widened too much.” Some banks also explain that the Bank of Korea intends to raise funds in advance for an additional base rate hike early next year.
There is also concern that the increase in the receiving rate by banks could be passed on to a rise in loan interest rates in the long term. The COFIX (Funding Cost Index), which is the basis of a variable rate mortgage loan, reflects the cost (interest rate) raised by a bank through deposits and savings accounts, financial bonds, repurchase receivables (RP), and cover notes. The proportion of savings and savings accounts reflected is around 70-80%. When the interest rate on savings and savings accounts rises, the Cofix and the variable interest rate on mortgage loans rise sequentially.
By Kim Dae-hoon, staff reporter daepun@hankyung.com
ⓒ Hankyung.com, unauthorized reprinting and redistribution prohibited
