Banks reignite deposit war as money flows back from stocks

Shinhan resumes special sales after 2-year pause — sixth time this year

NH NongHyup at 3.7%, Woori at 3.6% — time deposit rate race intensifies

Five major banks' time deposit balances rise 35 trillion won in a month

Residents use ATMs at a bank branch in Seoul. [Newsis]

Competition among banks for deposits is heating up. One bank that had not offered any limited-edition time deposit products for two years has now launched its sixth such sale this year, and a string of deposit products offering rates in the upper 3 percent range annually have appeared in quick succession. With the benchmark interest rate rising and stock market volatility increasing, banks are once again pulling out special sales and deposit rate hikes to secure funding for the second half of the year.

Shinhan Bank has been running the sixth round of its limited-edition "Shinhan SOL Mate" time deposit since Monday, with a cap of 500 billion won. The bank did not offer a single special time deposit sale in 2024 or 2025, but has already launched six such promotions this year.

The pace at which each sale sells out has also been accelerating. The fourth round, capped at 300 billion won, ran from July 13 to July 22. The fifth round, also capped at 300 billion won, sold out within a week of its July 27 launch. In response, Shinhan Bank raised the cap on the sixth round — which began Monday — back to 500 billion won. The maximum interest rate has also climbed, from 3.1 percent per annum in the first round to 3.5 percent in the fifth and sixth.

Special time deposit rates at major banks [Herald DB]

Other banks have joined the special-sale competition. NH NongHyup Bank launched a commemorative time deposit product capped at 300 billion won on Tuesday, ahead of its founding anniversary. The base rate for a one-year maturity is 3.15 percent per annum, rising to a maximum of 3.70 percent for customers who meet preferential conditions — such as joining the bank's Nongsim Cheonsim public participation group or leaving a message of support through the NH All One Bank app. A companion installment savings product launched alongside it offers a maximum rate of 8.15 percent per annum.

Woori Bank also rolled out a commemorative time deposit to mark the 150th birth anniversary of independence activist Kim Gu and Liberation Day. The product carries a 12-month maturity, a base rate of 3.40 percent per annum and a maximum of 3.60 percent for customers who fulfill preferential conditions such as leaving a message through the bank's "Our Wish" campaign. A companion installment savings product offers up to 8.29 percent per annum for a six-month maturity and up to 7.00 percent for a 12-month maturity.

Beyond special promotions, rates on regularly available deposit products are also trending upward. Hana Bank raised the base rates on 14 deposit products — six time deposits and seven installment savings products, among others — by 0.20 to 0.30 percentage points late last month. The rate on its flagship one-year time deposit has risen from 2.80 percent per annum at the start of the year to 3.20 percent last month, a gain of 0.40 percentage points over seven months.

Trend in time deposit balances at the five major banks [Herald DB]

One factor driving banks back into the deposit competition is the flow of funds returning from the stock market amid heightened volatility. "A large amount of money moved into the stock market from the second half of last year through early this year, so the need for banks to attract deposits has grown significantly now that a reverse money move is underway," a banking industry official said. The combined time deposit balance at the five major banks — KB Kookmin, Shinhan, Hana, Woori and NH NongHyup — stood at 984.94 trillion won ($711 billion) at the end of July, up 35.54 trillion won from a month earlier. By Thursday, the figure had climbed further to 991.44 trillion won.

The prospect of further interest rate increases is adding to the urgency, with banks moving quickly to lock in second-half funding. "There is a sense in the market that rates will rise, so banks seem to be placing greater emphasis on securing deposits in the second half," another banking industry official said. "It is an attempt to secure funding preemptively before financing costs rise further."

Major commercial bank time deposit rates currently sit in the mid-to-upper 3 percent range, but savings banks and other lenders have already introduced products in the 4 percent range. NH Savings Bank offered a maximum rate of 4.50 percent per annum on a 12-month special time deposit in June. Analysts say commercial bank deposit rates could rise further if market rates continue to climb and the central bank delivers additional benchmark rate increases.

rim@heraldcorp.com