Woori Bank’s 2nd term deposit product interest rate cut
Term deposit usage is expected to decrease gradually
Woori Bank decided to lower the interest rates for two of its flagship time deposit products. The interest rates of major banks’ flagship deposit products have been lowered one after another, pushing the bottom line.
According to the banknote on the 14th, Woori Bank decided to lower the interest rates of the term deposit products’Woori SUPER Term Deposit’ and’Senior Plus Woori Deposit’ from the 15th. Based on the maturity of one year, the interest rate of’Woori SUPER Term Deposit’ is reduced by 0.25% point from 0.90% per year to 0.65% per year, and the interest rate of’Senior Plus Woori Deposit’ is 0.30% per year from 0.55% per year. It is reduced by 0.25 percentage points.
The main background of this measure is that the interest rates of the flagship deposit products of the banking sector have fallen to a record low. An official from Woori Bank explained, “We have adjusted the interest rate considering that Woori Bank’s interest rate is 0.20% higher than that of other bank’s flagship deposit products.” However, the interest rate of’WON Deposit’, the flagship non-face-to-face time deposit product, remains at 0.90% based on a one-year maturity.
Since last year, as the interest rates of major banks’ flagship deposit products have virtually approached the’zero interest rate’, it is said that the utility of term deposits has disappeared both inside and outside the financial sector. An official from a commercial bank said, “There are a lot more inquiries about investments such as stocks and funds at the counter,” and said, “There will be no effect that the interest rate for term deposits has dropped to a record low.”
As a result, there are also observations that the use of term deposits this year will be significantly reduced. This is because the attractiveness of tying up money with time deposits over the years is gradually disappearing. For example, even if 10 million won is tied into a fixed deposit for one year, the interest that can be earned is less than 100,000 won, so it is complaining that’losses’ can be taken to account for the inflation rate.
Some analysts say that consumer backlash may occur. It is pointed out that since the deposit rate has already fallen as far as it will fall, complaints about further cuts may be expressed. Deposit products that give interest rates of 1% or more per year are gradually disappearing across all banknotes.
Banks are deepening concerns over growing consumer dissatisfaction with the’rattail interest’. Nevertheless, the position of banks is that they have no choice but to lower the receiving rate because concerns about profitability deterioration should be minimized due to prolonged low interest rates and intensifying competition with big tech. An official from the financial sector said, “There will be a lot of trouble between maintaining profitability and managing risk.”
Reporter Kim Seong-gil
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