There is a noticeable trend of funds moving back into bank deposits, referred to as a 'reverse money move.' In particular, over 20 trillion won has flowed into short-term deposits with maturities of less than six months in just one month. This shift follows two consecutive interest rate hikes by the Bank of Korea and increased volatility in the stock market, leading consumers to prefer shorter maturities to better respond to market conditions.
As of August 27, the total balance of time deposits at the five major banks—KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup—was recorded at 1,000 trillion 964.7 billion won. This marks an increase of 16.2 trillion won from the end of July (984 trillion 939.9 billion won) and over 51 trillion won from the end of June (949 trillion 399.8 billion won). This is the first time the balance of time deposits at these banks has exceeded 1,000 trillion won.
Notably, there has been a rapid influx of funds into short-term deposits with maturities of less than six months. As of the end of June, the balance of these deposits stood at 238 trillion 366.2 billion won, reflecting an increase of 20.9 trillion won from the previous month. This monthly increase is the largest since November 2022 (25.3 trillion won). In contrast, the balance of time deposits with maturities of three years or more decreased from 27.1 trillion won to 26.6 trillion won during the same period.
Market analysts attribute this trend to a growing demand for shorter-term investments in response to the uncertain financial market. Consumers are opting for shorter maturities, allowing them to reassess interest rates and market conditions at each maturity date before deciding on reinvestment or other investment options.
In fact, the speed of fund management has also increased. As of the end of June, the turnover rate of deposits at banks was 5.3 times, the highest level recorded this year. A higher turnover rate indicates that funds are remaining in accounts for shorter periods and that there is active movement of capital.
The relatively low attractiveness of long-term deposit rates is also influencing this trend. Currently, the major banks offer interest rates for six-month deposits at around 3.00% to 3.05% per annum, while one-year deposits yield about 3.20% to 3.25%. In contrast, three-year deposits are yielding only 2.40% to 2.70%, making it less appealing to lock in funds for extended periods without the prospect of higher returns.
A financial industry official stated, "As market volatility increases, there is a growing demand from customers seeking safe assets. Banks have little incentive to attract high-interest long-term deposits, so the trend of customers gravitating toward short-term products is likely to continue for the time being."
* This article has been translated by AI.
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