In the second quarter this year, deposit turnover at South Korea’s domestic banks reached its highest level in 26 years, driven in part by semiconductor companies deploying funds and households withdrawing deposits. A buoyant stock market and expectations of higher interest rates also appear to have accelerated the movement of funds.
Deposit turnover at South Korea’s domestic deposit-taking banks reached 4.9 times in the second quarter, its highest level since Q2 2000. That was approximately 30% higher than the 3.8 times recorded in the same quarter a year earlier, marking a fourth consecutive quarter of increase.
The rise in deposit turnover was partly driven by demand deposits, which turned over 22.7 times, up 32.7% year on year. Turnover of checking deposits, used by companies to issue checks and promissory notes, reached 702.6 times, a 23.5% increase.
Turnover of savings deposits, which include both individual and corporate deposits, was 12.3 times, up 30.9% from the same month a year earlier. Other deposits surged 63.9% to 5.9 times, while savings-type deposits turned over 1.6 times, the highest level since statistics were first compiled in 1985.
The increase is attributed in part to more active deployment of funds, particularly by semiconductor companies. Some analysts say the trend has spread among large exporters, as funds have shifted from being held in reserve to being put to work. A buoyant stock market and expectations of higher interest rates are also seen as encouraging deposit withdrawals and the reallocation of funds.