Korea's savings banks won the deposit war, and the 4% shelf emptied out

The average rate on 12-month time deposits across South Korea's savings banks fell to 3.77% a year, down 0.15 percentage points from 3.92% a month earlier, according to the consumer portal of the Korea Federation of Savings Banks ^[1]. The number that actually describes what happened sits on the shelf rather than in the average: products carrying a base rate of 4% or higher on a 12-month basis dropped from 165 to 32, a fall of 133, or 80.6%, in a single month ^[2].

The sequence matters. Money left deposit and savings accounts during the first-half equity rally, and savings banks raised rates to stop the bleeding ^[13]; the average one-year rate went from about 3.30% at the end of May to 3.79% at the end of June ^[3], a move of 0.49 percentage points in four weeks ^[1]. It peaked at 3.95% ^[4], reached the 3.9% range in early July, and was back in the 3.7% range little more than a month later ^[5].

Note the asymmetry. The average has given back 0.18 points from the peak ^[2], roughly 28% of the climb, leaving about 72% of it intact ^[3]. The 4%-plus shelf, by contrast, is 80% gone, with fewer than one product in five surviving ^[4]. The top preferential rate in the sector fell 0.35 points, from 4.45% to 4.10% ^[6], after a period in early July when some banks were running specials in the 4.6% range and more than 150 products paid above 4% ^[7]. Averages held; the marginal, promotional, deposit-grabbing tier was withdrawn. That is what funding-driven pricing looks like on the way out.

The named cuts fit. SBI Savings Bank took time deposits of 12 months or longer from 4.0% to 3.7%, a 0.3-point cut effective the 5th of this month ^[8] - twice the decline in the sector average over the same stretch ^[6]. OK Savings Bank trimmed non-face-to-face deposits from the 24th of last month, moving one-to-three-month money from 4.0% to 3.8% and three-to-six-month money from 4.0% to 3.9% ^[9].

The explanation offered in the reporting is entirely balance sheet, not policy. Analysts attribute the earlier climb to competition for deposits leaking into equities and the retreat to banks having secured the funding they needed ^[10]. An official at one savings bank said many banks "have filled the deposit levels they needed, and with limited room to expand lending, there is less need to maintain high deposit rates" ^[11]. A reverse flow is helping: with recent KOSPI volatility, money is returning to parking accounts and time deposits ^[12]. Deposits are arriving without being paid for.

For a saver, the practical read is that the ceiling moved 0.35 points in a month ^[6] and the menu thinned by four fifths ^[2]; rolling maturities now reprices into a different market. For a borrower, the funding relief is not a lending signal, since the constraint cited is loan capacity, not deposit cost ^[11].

Watch whether the average keeps sliding toward the pre-June 3.30% level ^[3] or settles near 3.7% ^[1]. Watch the gap between the sector average and the best preferential rate, currently 0.33 points ^[5], as the cleanest gauge of who still needs money. And watch the 4%-plus count ^[2]: if it rebuilds, the reverse money move ^[12] has stopped doing the work for them.