NH NongHyup Bank launches principal-guaranteed ELD with up to 11.45% return

NH NongHyup Bank announced Wednesday it will launch "Equity-Linked Deposit (ELD) No. 26-7," a product that guarantees the return of principal and a minimum agreed interest rate at maturity while offering the potential for higher additional returns.

The one-year product tracks the Kospi 200 index as its underlying asset, with returns determined by index movements. It comes in four types — Stability I, Stability II, Yield I and Yield II. The Stability types carry no knock-out condition, while the Yield types include a knock-out provision under which returns are locked in at the minimum rate early if the underlying asset rises above a set level before the final index determination date.

Stability I and Yield I are available exclusively to youth customers — individuals aged 19 to 34 as of the application date. The Kospi 200 Stability I type carries no knock-out condition and offers an annualized pre-tax return of 3.40 to 3.70 percent when the final index is 0 to 5 percent above the initial index. The Kospi 200 Yield I type offers an annualized pre-tax return of 2.90 to 11.45 percent for individual customers when the final index is 0 to 45 percent above the initial index.

The Kospi 200 Stability II type offers annualized pre-tax returns of 3.35 to 3.65 percent for individuals and 3.20 to 3.50 percent for corporations when the final index is 0 to 5 percent above the initial index. The Kospi 200 Yield II type offers annualized pre-tax returns of 2.90 to 10.10 percent for individuals and 2.80 to 10.00 percent for corporations when the final index is 0 to 45 percent above the initial index.

The subscription period runs from Wednesday through Aug. 7, and customers can sign up at branches nationwide as well as through NH All One Bank and NH Smart Banking. Subscriptions may close early if the sales limit is reached. The combined limit for Stability I and Stability II is 250 billion won ($171 million), while the combined limit for Yield I and Yield II is 100 billion won.

The ELD guarantees principal repayment and interest payment upon maturity. Early termination, however, may incur fees depending on the period elapsed, which could result in a loss of principal — the bank advises customers to fully understand the product before subscribing. The product also supports deposit-collateral loans and is covered under the deposit protection scheme.