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| A row of ATM machines belonging to banks are lined up in Seoul in this file photo. Korea Times file |
By Yi Whan-woo
Commercial banks are cautious about increasing their deposit rates following a 25-basis-point rate hike delivered by the Bank of Korea (BOK), Thursday, as the high deposit rates that they have offered are being blamed for the liquidity shortage in the bond and short-term money markets.
The deposit rates of first-tier banks have been hovering around the 5 percentage range this month, up from the 1 percent range a year earlier, as the BOK accelerated its credit-tightening policy.
The base rate was raised to a more-than-10-year high of 3.25 percent, Thursday.
The financial regulators have pressed the lenders to lower deposit interest rates so as to prevent cash outflows from the troubled debt market, which has been a major way for commercial firms as well as non-banking financial firms to raise capital.
Under the circumstances, several major banks told The Korea Times Friday that they are likely to keep their respective deposit rates unchanged, and even though they want to hike the rates, the timing of doing so remains uncertain.
"The BOK's benchmark interest rate is certainly a key index that we take into account in determining our respective interest rate, but it does not mean we will increase the rate whenever the BOK does so," a Hana Bank public relations employee said.
He said the BOK's quarter-percentage-point rate increase "has been reflected in advance" in Hana Bank's rate policy, noting that such an increase in pace was within market expectations, Thursday.
"An immediate increase in the deposit rate, therefore, is not in our plans, although we'll closely follow the market situation," he added.
Speaking on condition of anonymity, an employee of a different bank voiced a similar opinion. "The higher the deposit rate you offer, the more likely you will be targeted by the authorities nowadays," the employee said.
A Kookmin Bank employee noted that many businesses struggle to raise money from the debt market, and that such a liquidity shortage can eventually deal a blow to lenders considering that those businesses are also their customers.
"It is important to have a broader view concerning the sales strategy, and we want to ensure our strategy is aimed at co-prosperity with our customers," he said.
Among the five biggest banks, KB Kookmin offers a 4.82 percent interest rate for a term deposit with a maturity period of one year. It is comparable to the 4.95 percent offered by Shinhan, the 5 percent by Hana, the 4.98 percent by Woori and the 5.10 percent by NH NongHyup.
Meanwhile, the banks are anticipated to keep their lending rates unchanged, which in turn is likely to be welcomed by homeowners who face a mounting burden with their repayments.
Many of them are young, low-income earners who took out home loans when the borrowing rate was far cheaper.
