Household savings growth lowest in 6 years

South Korean households’ savings increased at the slowest pace in six years in 2013 as they struggled to meet spending commitments and sought after investment vehicles offering higher returns amid low interest rates, data showed on Tuesday.

Households’ deposits at banks stood at 501.7 trillion won ($469 billion) at the end of last year, up 6.6 percent from a year earlier, according to the data compiled by the Bank of Korea.

Of them, savings deposits, which earn interests for a relatively long period of deposit, increased 5.5 percent on-year to 459.74 trillion won last year, the slowest in six years.

The savings deposits surged 16 percent in 2010, but its growth pace slowed to 9.4 percent in 2011 and 6.2 percent in 2012, the data showed.

In contrast, demand deposits, on which banks usually pay no interests, surged 20.3 percent on-year to reach 41.96 trillion won last year, the fastest pace in 12 years, the data showed.

“Low interest rates forced bank customers to manage their money on a short-term basis and chase after other investment vehicles that provide higher returns,” said Lee Seung-hoon, a researcher at KB Financial Group. (Yonhap)