South Korea's Big-5 Banks See Term Deposits Surge Past 1,030 Trillion Won in Stock Rout

The Quick Take

• South Korea's five major banks saw combined term deposits surpass 1,030 trillion won — a 93-trillion-won increase in just six months.
• October alone added more than 24 trillion won as a simultaneous equity-market sell-off and rising interest rates drove savers from stocks into fixed deposits.
• The deposit surge tightens competition for bank funding but also lifts net-interest margins, creating a nuanced short-term earnings dynamic.

South Korea's dominant commercial lenders — KB Kookmin, Shinhan, Hana, Woori and NH NongHyup — collectively reported term-deposit balances crossing the 1,030-trillion-won threshold at end-October, extending a six-month streak of continuous inflows. The aggregate figure represents a jump of roughly 93 trillion won since April, with October's 24-trillion-won single-month surge standing out as a particularly sharp acceleration. Financial analysts attribute the speed of the inflow to a double catalyst: the domestic equity market entered a steep correction in mid-October at the same time that one-year deposit rates at several banks moved above 4 per cent for the first time since early 2024.

For South Korean households — who hold a significantly higher proportion of their savings in bank deposits compared to peers in the United States and Europe — the yield improvement on fixed-term products offered a compelling argument to rotate out of equity-linked savings schemes and money-market funds. The pattern mirrors the deposit-gathering dynamic seen across advanced economies when rates rose sharply in 2022 and 2023, though South Korea's earlier and larger initial rate response meant its deposit cycle began to accelerate ahead of western peers.

For equity investors in Korean bank stocks, the data point is a double-edged signal. Rising term-deposit volumes broaden the stable-funding base and help match the duration of fixed-rate loan books, reducing asset-liability mismatch risk. However, the higher rates required to attract deposits compress the spread between lending and funding costs, particularly for mortgage and consumer-loan portfolios repricing at a lag. Net-interest-margin guidance from the big-five banks at their upcoming Q3 results calls will be watched for signals on whether the rate environment is becoming net supportive or net dilutive for profitability.

Synthesized from 2 sources.