Interest rate deposit products in the mid-4% range also appear one after another
Loans are decreasing…crying high interest rates
Savings banks are releasing interest rate deposit products in the mid-4% range one after another. Despite the poor performance in the first quarter of this year and the need to tighten the belt, commercial banks are offering 4% deposit products, which is interpreted as “crying and eating mustard.”
According to the industry on the 20th, Daol Savings Bank launched “Fi Hybrid Time Deposit” the previous day, which provides up to 4.5% annual interest rate. It is the industry’s highest-interest deposit product based on the announcement of the Korea Federation of Savings Banks the previous day. If the maturity is maintained without any special preferential conditions, the 4.5% interest rate will be applied as it is. There is no maximum amount limit.
In particular, it is characterized by the combination of the characteristics of parking accounts that are free to deposit and withdraw. It is possible to terminate in installments up to three times (without expiration) during the deposit period, and the interest rate applied at this time also reaches 3.5%. Analysts say it is somewhat unconventional considering that only 0.1 to 70% of the agreed interest rate is provided if regular deposit products are terminated in the middle.
In addition, other CK Savings Bank, Cham Savings Bank, and Sangsangin Savings Bank have also started to attract customers with 4.42 to 4.45% annual interest rate regular deposit products. Commercial banks such as SC First Bank (4.10 percent per annum) and BNK Busan Bank (4.00 percent per annum) are also aggressively operating to prevent the withdrawal of receiving backlogs when they released time deposit products in the 4% range. According to the Bank of Korea, the balance of receiving savings banks (based on the end of the month) has already decreased by more than 6 trillion won from 120.7854 trillion won in January this year to 114.6159 trillion won in April.
The problem is that the situation is not good enough to continue the aggressive reception attraction strategy. In the first quarter of this year, the net loss of 79 savings banks reached 52.3 billion won. Net profit plunged by 500 billion won from 456.1 billion won in the same period last year. It is the first time in nine years that overall industry performance has turned to a net loss since the second quarter of 2014. This is because they sold high-interest products compared to commercial banks in the continued high-interest rate situation, but they are having difficulty securing profitability as loans, the only source of financing, have not increased. According to the Bank of Korea, the loan balance of savings banks decreased by 3.5 trillion won from 115.6003 trillion won in January to 11.287.9 billion won in April.
An official from a savings bank said, “The situation is not easy because the maximum interest rate on loans is set and financing methods are limited, but we have no choice but to come up with high-interest receiving products to prevent the situation from getting worse than now.”
