Deposits in Ukraine are becoming less profitable

Ukrainian banks perform their new year’s promises and one by one reduce the interest on deposits. Thus, in January the average yield of hryvnia deposits decreased by 0.2 – 0.3% per annum (2016 – 4%), and currency – 0,26 – 0,4% per annum (2%), writes UBR.

In the end, six-month investment in national currency at the beginning of February would pay an average of 16.75% per annum and 12-month — 17,45%. Investing on the same terms in foreign currency deposits could earn 4,73% and 5.39% per annum, respectively.

Heaviest depositors of distressed PrivatBank, which after nationalization had to conduct a large-scale reduction rate. It by 2% per annum lowered the interest on foreign currency deposits and on 1 – 1,5% in the hryvnia. At the same time, the depositors of “Privat” was entitled to 100% compensation on deposits from the state.

Gosy pay less

Bankers warn you – this is not the last decrease in rates, in the 2017th will be a few. According to the forecast of the Chairman of the Bank “Credit Dnepr” Andrey Moyseenko by the beginning of 2018 the average cost of deposits in the national currency will decrease by 3 to 4% per annum. First and foremost, thanks to the state banks — that they become “instigators”, and will follow everyone else.

And this is confirmed not only in PrivatBank, where even the current 19% per annum on investments in national currency is considered high, but in other government agencies. Oshchadbank confirmed that they are ready to lower the yield on all types of deposits: today they pay about 17.5% of hryvnia deposits and 5.5% on a currency.

“In the near future rates will lower, primarily in local currency. In the future, after a few months I think there will be another wave of rate cuts. In the long term indicator is the discount rate”, — explained the situation to the Deputy Chairman of the Board oschadbanka Anton Tyutyunov.

The market is now very actively discussing the 14% discount rate of the national Bank as the average cost of hryvnia Deposit in the country. Tell you that a week ago, the Chairman of national Bank Valeria Gontareva openly put such a task on a small meeting with the leaders of the four state-owned banks (Oschadbank, PrivatBank, Ukreximbank and Ukrgasbank) — lower Deposit interest for the population to 14% per annum.

“If inflation will drop to 9 – 10% and Deposit rates to 14% per annum, we get the average price of the loan 20% it is still expensive for businesses, and will kill the economy. Therefore, the yield of deposits should decrease more, because the goal is to maximally lower the interest on loans”, — commented the Chairman of the Commission in banking analysis of Ukrainian society of financial analysts Vitaly Shapran.

Reduction of Deposit interest in the state banks would mean a massive reduction in the cost of deposits in the country. In a single one of PrivatBank is one-third of all Bank savings of the population, and in all four state-owned banks — 65% of Ukrainians.

Deposit ladder

There is no doubt that after the state will be followed and other financial institutions with the Ukrainian shareholders. Banks with European capital have fallen off their Deposit rates at the end of 2016, Someone 1 – 2% per annum at a time, and someone fell swoop — just half, but the result dismayed many investors: the hryvnia rate dipped to 7.5 – 12% per annum, and foreign currency — to 0.1 – 1.5% per annum.

“The first half of the year in Ukraine — a period not very high business activity. January holiday, February is short and dead in the spring lull with the may holidays, when two weeks no work, then the holiday season. Perhaps the activity will be transferred to the second half of the year,” — said acting Chairman of the Board of Vector-Bank Oleg Fesenko.

To speed up the process can only be a national Bank — if you begin to actively reduce its discount rate (in 2016 he dropped it 5 times before you can pin at 14%), which is tied to current earnings of financiers: the following discount rate decreases the profitability of Deposit certificates of the NBU. It is they, not the lending corporations and the population, the Ukrainian banks earned in recent years, a significant portion of their income.

Meanwhile, commercial banks with the Ukrainian shareholders primarily retain the return on their deposits at the level of 2016 And trying to win over the maintenance of all unhappy with the drop in rates from the “foreigners” and the state banks

At the same time, most of these institutions long ago rewrote their contracts so as to have the opportunity to reduce interest to depositors under existing contracts. Because not always has a trendy appeal, put the money to lower yield, yet you can do so on favorable terms. Experts suggest to read the agreement with the banks and check the head on the right Bank to reduce interest following the changes in the Ukrainian economy or the revision of the NBU discount rate.