The Bank of Korea announced on Nov. 17 that the savings deposits exceeding one billion won totaled 593.5 trillion won in the first half of this year, up 11.5 percent from a year earlier. The rate of increase is the highest since the second half of 2010 with the only exception of the second half of 2018, when it amounted to 13.3 percent. Given that such savings deposits are corporations’ in most cases, it can be said that companies are refraining from borrowing money from banks and making investments amid economic uncertainties and despite low interest rates.
Such savings deposits increased 9.2 percent in 2015, 7 percent in 2016, and 7.2 percent in 2017. In other words, such deposits showed a significant increase under the current government.
In September this year, capital expenditures showed a year-on-year decline of 1.6 percent, continuing to fall for the 11th consecutive month. Last year, the expenditures dropped 4.2 percent from a year ago to result in the steepest decline in nine years. On the other hand, South Korean companies’ deposits in banks rose 4.4 percent from 331.9 trillion won to 346.5 trillion won from January to September. During the same period, households’ deposits increased 3.6 percent.
In addition, South Korean banks are still focusing on household loans rather than trying to provide more business loans for more investment. Since the first half of 2015, household loans have surged 33.2 percent while business loans have edged up 6.94 percent.