Commercial-bank time deposits return to the % range, banks scramble to attract corporate funds3:
Time-deposit rates at major commercial banks have risen again to the 3% range. Against a backdrop of rising market rates and expectations of a policy-rate hike, banks are rolling out corporate-only deposits and special offers one after another to attract companies’ surplus funds. This could affect companies’ short-term fund management and banks’ funding costs.
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Time-deposit rates at major commercial banks have climbed back into the 3% range. This directly affects how investors and companies manage their cash.
Expectations of a policy-rate hike are behind the rise in market rates. Banks explained that this trend is being reflected in deposit rates.
Banks have actively moved to attract corporate deposits. They are drawing in companies’ surplus funds by launching corporate-only time deposits and special-offer products.
Companies are showing a tendency to choose higher interest rates when placing short-term funds. Corporate treasury teams are reviewing maturities and interest payment terms.
From the banks’ perspective, they are currently in a situation where they need to increase funding immediately. Rising deposit rates affect banks’ funding costs.
Financial market participants are watching the Bank of Korea’s future interest-rate decisions and short-term market-rate trends. The outcome of the next Monetary Policy Board meeting could be an important variable.
In the short term, deposit product disclosures and competition among banks over interest rates should be monitored. Both companies and individuals need to review deposit maturities and compare interest rates.