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Major banks see time deposit growth stall amid equity boom
ATMs of major banks are installed in Seoul, Dec. 21. Yonhap
By Jun Ji-hye
Lenders raise deposit rates to stem outflows
The combined balance of time deposits at the nation’s five major banks rose by just 1.4 percent in 2025, a sharp slowdown in growth as a strong stock market drew money away from banks’ main funding sources, industry officials said Tuesday.
Time deposits at KB Kookmin, Shinhan, Hana, Woori and NongHyup Bank totaled 939.3 trillion won ($650 billion) at the end of 2025, marking a modest increase of about 1.4 percent, or 12.6 trillion won, up from 926.7 trillion won at the end of 2024.
The pace of growth slowed sharply from 2024, when balances jumped by 77.4 trillion won from the previous year, a 9.1 percent increase.
The slowdown is widely attributed to last year’s exceptional stock market rally, which saw the KOSPI surpass the 4,000 level for the first time.
In December alone, time deposit balances fell by 32.7 trillion won from the previous month, with market watchers saying funds from maturing deposits flowed into equities and alternative investments such as cryptocurrencies, rather than remaining in bank deposit products.
Time deposits, which offer a safe way to manage large sums and generally carry lower rates than installment savings, are a key funding source for banks. As stock prices continue to surge and the risk of further deposit outflows grows, banks have made some moves starting late last year to retain funds by launching high-interest promotional time deposit products.
Shinhan Bank raised the maximum rate on its time deposits by 0.3 percentage points last month, from 2.8 percent to 3.1 percent. Hana Bank followed suit, with its time deposit rate rising from 2.45 percent to 2.85 percent.
Deposit rates at commercial banks have overtaken those at savings banks for the first time since the Asian financial crisis of the late 1990s.
Data from the Bank of Korea released Dec. 29 showed that the average rate on newly issued bank deposits rose by 0.24 percentage points month on month to 2.81 percent in November, extending its upward streak to three months.
Banks’ overall deposit rates came in at 2.78 percent, edging above the 2.75 percent offered by savings banks.
Such a reversal has not occurred since 1998, when authorities and banks moved aggressively to raise policy and deposit rates to prevent a rapid exodus of funds.
“As money flows are being reshaped around the stock market, banks are facing growing pressure from the outflow of idle funds and are reinforcing deposit retention measures, including revising deposit rates,” an official at one of the major banks said.