Deposits at non-bank financial institutions, including savings banks, have reached a record high, central bank data showed Monday, as people sought to maximize their interest earnings while the key rate remains at a record low.
As of end-April, deposits held at non-bank financial institutions came to some 2,022.15 trillion won ($1.725 trillion), according to the data compiled by the Bank of Korea.
The April reading marks a great increase from 1,911.1 trillion won tallied at the end of 2015. It also marks the highest level since 1993 when the central bank began compiling such data.
Non-bank financial institutions include insurance and asset management firms that, unlike fully licensed commercial banks, offer limited services but generally higher yields on deposits.
Deposits held at such institutions have been on a steady rise since the 2008 global financial crisis.
The total came to some 1,577 trillion won at the end of 2013, spiking from a little over 1,000 trillion won at the start of 2008.
The rate of increase is also accelerating with the amount jumping 10.1 percent on-year in 2015 alone. The increase in the first four months of the year again marks a 5.8-percent spike, according to the BOK.
Such a steep increase was partly attributed to a slowing investment by companies and retail investors amid a prolonged economic slump.
South Korea's exports have dipped every single month since the start of last year, while its consumer spending has also remained quite disappointing.
The country's consumer prices only inched up 0.8 percent on-year in May, falling short of the central bank's 2-percent target for this year.
However, the large increase in deposits at non-bank institutions was also attributed to record low interest rates that have apparently slashed offered rates of commercial banks by a greater margin.
"It appears more money found its way to the non-bank sector that offers a higher rate than commercial banks, no matter how small the difference is," a central bank official said, asking not to be identified.
As of end-April, deposits held at the country's major commercial banks came to 1,171 trillion won, up only 0.7 percent from the end of 2015, according to the BOK.
The people's lean toward non-commercial banks is widely expected to continue.
The BOK had kept the policy rate at a record low of 1.5 percent for 11 consecutive months since July 2015 before lowering to a fresh record low of 1.25 percent earlier this month. (Yonhap)
