Retail dollar deposits at South Korean banks have swelled to their largest level in four years and 10 months as the won has strengthened against both the dollar and the yen. Overdraft loan balances at commercial banks are also climbing quickly amid heightened volatility in the domestic stock market. Sales of gold bars, a safe-haven asset, exceeded September's full-month total in just the first half of October.
Retail dollar deposits at the five largest commercial banks — KB Kookmin, Shinhan, Hana, Woori Bank and NH NongHyup — stood at $14.23 billion as of the 15th, according to financial industry sources on the 18th. That is the highest level since December 2021, when the figure reached $14.65 billion.
Total dollar deposits amounted to $78.78 billion, up 34.1% from the end of March, when the balance hit its lowest point this year at $58.76 billion. Of that total, corporate dollar deposits came to $64.55 billion, down $5.35 billion, or 7.7%, from $69.9 billion at the end of September. The won-dollar exchange rate fell to as low as 1,328.9 won during trading on the 16th, its weakest level for the dollar in two years.
Yen deposits also surged. The five banks held 1.14627 trillion yen in yen deposits, the highest level in two years. Retail yen deposits in particular rose 4.6% from the end of September to 265.62 billion yen. The won-yen rate fell to as low as 839.9 won during trading, the lowest since January 2008, and the increase is attributed to a combination of currency-trading strategies and demand tied to travel to Japan and investment in Japanese stocks.
Unsecured loan balances also increased as market volatility widened. The rise is attributed to growing demand for leveraged investing — borrowing money to buy stocks — from investors looking to buy the dip during the recent sharp decline in Korean equities. Retail unsecured loans at the five banks totaled 109.7121 trillion won as of the 15th, up 1.4818 trillion won, or 1.4%, from 108.2303 trillion won at the end of September.
Total unsecured loan balances returned to growth in July, the first increase in three months. Overdraft loan balances rose especially sharply, reaching 44.4546 trillion won as of the 15th, up 1.4712 trillion won, or 3.4%, from 42.9834 trillion won at the end of September. That is the largest amount since August 2022, when the balance stood at 44.7699 trillion won.
Demand for physical gold, another safe-haven asset, also grew. Gold bar sales at the five banks totaled 43.03 billion won from Oct. 1 through the 15th. That is 1.5 times the 29.08 billion won sold during all of September and the highest level since April, when sales reached 49.01 billion won.
Still, balances in gold banking accounts continue to decline, making it difficult to conclude that investor appetite for gold has revived. Balances at KB Kookmin, Shinhan and Woori Bank, which offer gold banking products, stood at 1.6356 trillion won as of the 15th, down 35.8 billion won, or 2.1%, from 1.6714 trillion won at the end of September. The balance peaked at 2.4434 trillion won at the end of January and has trended lower since.