Kwangju Bank Tops at 4.04% as Banks Begin Competition for Annual Deposit Rates in the 4% Range

[Financial News] Competition for deposits is heating up as fixed-deposit products offering annual interest rates in the 4% range have emerged in the banking sector. Banks are raising deposit rates one after another to attract customers who want to manage their funds over the short term during a period of rising rates or secure higher interest income.
According to the Korea Federation of Banks (KFB) on the 30th, Kwangju Bank's Good Start Deposit offers a maximum annual interest rate of 4.04%. This consists of a base rate of 3.54% plus preferential rates of 0.4 percentage points for first-time deposit customers and 0.1 percentage points for consenting to the collection and use of personal credit information. The deposit has a one-year term, with deposits ranging from KRW 1 million to a maximum of KRW 100 million.
Products offering rates close to 4% annually are also drawing attention. THE JEONBUK BANK's JB Direct Deposit Account and JB Direct (Flexible Maturity) Deposit each offer an annual rate of 3.92% without separate preferential conditions. Busan Bank's The Special Term Deposit offers a maximum annual rate of 3.92%, while Suhyup Bank's Sh First-Meeting Preferential Deposit offers up to 3.91% annually.
Major commercial banks are also raising their rates. Shinhan Bank raised the rate for three-month deposits from 2.85% to 3.10% annually on this day, an increase of 0.25 percentage points. This was the first time the three-month rate had reached the 3% range since it stood at 3.10% annually on January 9 last year. The six-month rate rose from 3.15% to 3.30%, an increase of 0.15 percentage points, while the 12-month rate increased from 3.40% to 3.50%, up 0.10 percentage points. The shorter the maturity, the larger the increase.
As the five major commercial banks began raising rates in September, the maximum rates for their flagship one-year fixed-deposit products rose to between 3.40% and 3.55% annually.
KB Kookmin Bank raised the rate for the one-year-or-more but less-than-two-year term of its KB Star Term Deposit twice this month, bringing it to 3.50% annually. Bank of Hope also raised the one-year rate for its Hana Term Deposit twice and is now offering 3.40% annually. Nonghyup Bank's NH AllOne e-Deposit and Woori Bank's WON Plus Deposit each had their rates raised twice this month, bringing their one-year rates to 3.55% and 3.50% annually, respectively.
A bank official said, "With the stock market recently slowing and interest rates entering an upward cycle, demand is increasing among customers who want to manage their funds over the short term. Competition to attract new funds and renew existing deposits will intensify ahead of the year-end and the beginning of next year."
[email protected] Ye Byung-jung Reporter