The total balance for fixed-term deposits as of the end of last year stood at 668.4 trillion won ($599 billion), up 72.2 trillion won from a year earlier, according to the Bank of Korea.
This on-year increase was the largest since the 95.7 trillion won observed in 2010, when the banking industry was rebounding from the aftermath of the global financial crisis. The year-on-year figure came to 19.4 trillion won in 2016 and 28.8 trillion won in 2017.
The upward trend in deposits throughout the year 2018 was largely attributable to the change in the BOK’s decision in November 2017 to increase the nation’s policy interest rate for the first time in more than six years. The benchmark rate currently is fixed at 1.5 percent, amid burgeoning speculations that the central bank will inch up the figure by 25 basis points at least once this year.
Also, commercial banks have recently been gearing up efforts to attract deposits, in step with the financial authorities’ tightened grip on liquidity requirements.
The baseline for Liquidity Coverage Ratio -- the ratio of high-quality liquid assets held by financial institutions -- was raised last year to 95 percent from the previous 90 percent and was raised further this year to 100 percent.
The LCR regulation was introduced to ensure that the banks may survive liquidity stress situations for 30 days or more.
According to the BOK’s financial stability report submitted to the National Assembly in December, the average LCR at local banks stood at 104.7 percent as of the end of the third quarter, up 3.8 percent from a year earlier.
As part of efforts to attract deposits and to boost their liquidity index, banks have been rolling out special promotions, offering more favorable deposit interest rates. As of end-November, the average annual deposit rate for newly opened deposits stood at 2.15 percent, the highest in three years and 10 months, BOK data showed.
Back in year 2016, when the central bank cut down the base rate, the annual deposit rate had sunken to a record-low average of 1.36 percent.
Also, the number of lump sum accounts -- holding 1 billion won or more in balance -- climbed to 41,000 as of the end of June last year, up 7.9 percent from a year earlier. This was the highest half-year figure in six years, according to the BOK.
By Bae Hyun-jung (email@example.com)