KB Kookmin Bank raises 1-year fixed deposit rate to 3.5%, highest among big 5

KB Kookmin Bank has raised the interest rate on its flagship fixed deposit product for the second time in a week, lifting the one-year rate to 3.5 percent per annum to reflect rising market rates.

The bank said Monday it would increase rates on select maturity terms of its "KB Star" fixed deposit by 0.1 percentage point.

The move follows an earlier adjustment last Monday, when the bank raised rates on the same product by 0.15 to 0.60 percentage points depending on the term.

Under the latest revision, the rate for terms of 12 months to under 24 months rose from 3.40 percent to 3.50 percent per annum. The six-to-under-nine-month and nine-to-under-12-month brackets each climbed 0.10 percentage point, from 3.15 percent to 3.25 percent per annum.

Longer-term brackets, which saw relatively larger increases last week, were left unchanged this time. The rate for terms of 24 months to under 36 months had already jumped 0.60 percentage point — from 2.40 percent to 3.00 percent per annum — last Monday and held steady this week. The 36-month rate also remained unchanged at 2.60 percent per annum.

"We decided to raise deposit rates to reflect the recent upward trend in market interest rates," the bank said.

With the latest increase, KB Kookmin Bank's one-year fixed deposit rate is now the highest among the five major banks. NH NongHyup Bank's "NH All-One e-Deposit" offers 3.45 percent per annum, Shinhan Bank's "Sol Convenient Fixed Deposit" and Woori Bank's "WON Plus Deposit" each offer 3.40 percent, and Hana Bank's "Hana Fixed Deposit" offers 3.30 percent.

As the big five banks' flagship fixed deposit rates climb into the mid-3 percent range, money is flowing into the banking sector at an accelerating pace. The combined fixed deposit balance at the five banks stood at 1,010.37 trillion won ($732 billion) as of Thursday, up 5.14 trillion won from 1,005.23 trillion won at the end of August. Balances have risen continuously since May, growing by more than 73 trillion won over five months.

"With lending regulations limiting how banks can deploy funds, they are raising deposit rates one after another to broaden their deposit base," a banking industry official said.