TOKYO -- Foreign-currency deposits held by Japanese households reached their highest point in three years this June as low interest rates spurred savers to hunt for better returns and banks to seek more fee income to supplement shrinking profits.

The total grew 9% on the year to 6.15 trillion yen ($54.5 billion) at the end of that month, Bank of Japan data shows. This continued a steady rise since the central bank's February 2016 adoption of negative rates that has boosted deposits by roughly 500 billion yen compared with March of that year.

The policy change prompted a number of megabanks and other financial institutions to lower rates on yen deposits in 2016. "Since rates are staying low, I started a foreign-currency deposit account for my retirement nest egg," a Tokyo woman in her 60s said.

Foreign-currency deposits typically offer higher interest rates than those denominated in yen, along with the possibility of additional profit upon converting back to yen if the Japanese currency weakens enough to offset the fees charged by banks.

But given that yen deposit rates were not all that high to begin with, currency movements and more aggressive marketing by banks likely had a greater impact.

"Companies started competing to cut fees this fiscal year," a representative at an online bank noted. SBI Sumishin Net Bank lowered what it charges for yen-dollar conversions from 0.15 yen per dollar to 0.04 yen in August.

"Fees for foreign-currency deposits have become a major profit source for us," another online bank representative said.

Banks tend to push such products when the yen is strengthening and consumers see foreign currencies as more of a bargain. Foreign-currency deposits at Sony Bank reached a three-year high of 353.5 billion yen this past June.

(Nikkei)