Bank deposits rebound as higher rates draw funds back

A 31-year-old office worker in Seoul surnamed Lee says she has recently stopped putting new money into stocks and instead plans to park her spare cash in a bank deposit.

"Most of my investments are in semiconductor stocks like Samsung Electronics and SK hynix, and I'm in the red," she said.

"After seeing some banks offering deposit rates of more than 3 percent, I decided to move some cash from my brokerage account and other spare funds into a one-year deposit." Lee is among a growing number of investors shifting money back into bank deposits as lenders raise deposit rates following the central bank's latest interest rate hike.

The Bank of Korea (BOK) last Thursday raised its benchmark interest rate by 0.25 percentage points to 2.75 percent, marking its first increase in three and a half years.

Commercial banks have since lifted deposit rates above 3 percent for the first time in more than a year.

KB Kookmin Bank said Wednesday it would raise rates on major deposit and savings products by up to 0.3 percentage point.

The rate on its flagship one-year KB Star Deposit will increase to 3.2 per ...