S.Korea's banks see deposits plummet $35.5 billion in Jan

Banks in South Korea last month saw deposits plummet over 45 trillion won ($35.5 billion) from the previous month due to a decline in deposit interest rates.

The stock market rebound early this year, however, led to about 51 trillion won of funds flowing into asset management companies.

The Bank of Korea on Thursday said bank deposits last month fell 45.4 trillion won from December last year. Money market deposits nosedived 59.5 trillion won, the largest drop since January 2002, when the government began compiling related statistics.

Time deposits saw a fall of 900 billion won. The interest rate range on such deposits at major banks dropped from over 5% in November last year to the 3% level this year due to financial authorities curbing the increase in deposit rates. The government’s rate crackdown was another factor behind the fund flight from the banking sector.

Deposits in asset management companies, meanwhile, saw a huge jump from a drop of 4.6 trillion won in December last year to a rise of 51.4 trillion won last month. Money market funds, a leading short-term financial product, increased 39 trillion won while growth was seen in stock-type funds of 4.1 trillion won, bond-type funds 2 trillion won and other funds 6.9 trillion won.

Household bank loans shrank 4.6 trillion won in amount last month, the largest decrease since such data began to be compiled in 2004. Compared to deposit rates, lending rates were only slightly lower so the borrowing burden remained high.

Write to Do-Won Lim at van7691@hankyung.com