BUSINESS

Corporate deposits at banks fall by most in Q1: data

By Cho Chung-un
  • Published : May 20, 2017 - 13:59
  • Updated : May 20, 2017 - 13:59

Corporate deposits held by South Korean banks decreased by the largest amount in the first three months of the year, central bank data showed Saturday, as businesses are moving to expand investment amid an upturn in Asia's fourth-largest economy.

Total bank savings by local businesses reached 367.5 trillion won ($327.4 billion) as of end-March, down 15.9 trillion won, or 4.2 percent from three months earlier, according to the data compiled by the Bank of Korea.

It is the largest on-quarter decline in history, outnumbering the earlier record of 11.3 trillion won tallied in the first quarter of 2006.

Meanwhile, household deposits at banks rose 1.1 percent on-quarter to 587.2 trillion won.

The sharp fall in corporate deposits came after years-long stagnant investment and employment due to a protracted slump in the South Korean economy.

In 2016, companies saved 383.5 trillion won, up 35.4 trillion won from a year earlier, marking the fastest on-year gain since 2010, when corporate deposits went up 52.5 trillion won.

But from the beginning of 2017, Asia's fourth-largest economy showed some clear signs of recovery, led by brisk exports and corporate investment.

South Korea's exports, the key economic driver, rose for six months in a row since November last year thanks to recovered global trade. Investment by KOSPI- and KOSDAQ-listed companies jumped 25.9 percent on-year to 1.3 trillion won in the January-March period.

Also, overseas direct investment made by South Korean companies soared 30.2 percent to a record $10.71 billion in the first three months of the year.

"It is partly because of increased investment spending by big-sized companies, resulting in a drop in corporate bank deposits," said Cho Young-moo, a senior economist at LG Economic Research Institute.

(Yonhap)