In another show of poor spending and investment sentiment, South Korean consumer deposits at banks increased at the fastest pace in more than six years in the first quarter ended March.
According to data from the Bank of Korea on Wednesday, the outstanding balance in households’ deposits in banks reached 614.34 trillion won ($568.3 billion) as of March, up 14.23 trillion won from three months ago. It is the largest gain over three months since the fourth quarter of 2011.
The 25-basis point hike in the policy rate by the Bank of Korea in November - the first increase in more than six years - lured cash-rich consumers to park their savings in banks amid lack of investment opportunities due to murky economic conditions and higher interest rate environment.
The weighted average interest rate of bank deposits such as of installment savings and fixed deposits was 1.77 percent on an annual basis in the January-March period, which is the highest level since the first quarter of 2015 when the annual rate stood at 2 percent.
The inflation-adjusted rate, however, still remained in the zero percent level in the first quarter, suggesting that interest rate may not have been the only factor that led households to turn to banks.
The stock market lost its bullish note while real estate and housing market chilled amid higher interest rates and clampdown on real estate speculators. The frenzy over crypto currency also has fizzled out.
By Kim In-oh and Lee Eun-joo
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]