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Deposit rates up to 22%: how banks prepared for the Central Bank meeting
Russian banks have prepared savings products for the next meeting of the boards of directors of Russian banks, which will take place on October 25. Frank RG data reviewed by Forbes show that over the past month, the average maximum yield on deposits for individual clients of the 20 largest banks by deposit portfolio increased from 18.45% to 19.66%. The average range of the maximum increase in interest rates of 20 large credit institutions was from 0.38 to 3.75 percentage points.
The increase in interest rates was recorded by the Moscow Exchange Financial Services Project. According to the data, as of October 7, the maximum interest rate on six- and 12-month deposits in the top 50 banks reached 21%, and the highest yield was 20% per annum on three-month deposits. According to the financial market Banki.ru, since the beginning of October, conditions have improved for a number of savings products from Sberbank, VTB, Sovcombank, RSHB, Post Bank, MTS Bank, Uralsib, ATB, Loco Bank and others. . .
Thus, in October, VTB increased interest rates on deposits by 1.6 percentage points for a term of three to six months, and on savings accounts, the base rate by 3 percentage points for daily deposits and by 4 percentage points for minimum balances. The maximum interest rate on VTB deposits reached 21% per annum for savings accounts, and up to 20% per annum for savings accounts, the bank's press service reports.
Since October 8, Bank Dom.RF has increased the rate of return on deposits for builders "My House" for placement periods of 3, 6 and 9 months. The maximum interest rate on deposits will remain in effect at 20.7% for six months, said Nikita Kazantsev, head of the bank's product and services department.
Sovcombank has raised interest rates on term deposits, and the maximum interest rate on the bank's savings products has reached 24%. You can earn it within 36 months if you follow the "5x10" rule (use the "Halva" card to make at least 5 purchases per month for a total of at least 10,000 rubles). The base interest rate for this period was 21%, the bank's press service reported.
Pochtabank has increased the yield on short-term deposits to 21% per annum, said Deputy Manager, Chairman of the Board of Directors of the bank Alexey Okhorzin. For new and existing clients, the maximum interest rate on the "welcome" deposit is valid for 6 and 9 months.
From October 10, Rosselkhozbank will offer interest rates of up to 22% to new clients who open a "Your Deposit" without the option of replenishment, pay interest on repayment and make expenditure transactions for three or six months. Terminology. The offer is also valid for the bank's clients who do not have an active deposit or savings account within 30 days of opening a new deposit.
A little earlier, on September 30, Sberbank improved the terms of its savings products. According to the bank's press service, the maximum yield on the "Best Percent" and "Sberinvest" lines was 20% per annum for 7-9 months.
Some banks have adjusted their deposit yields several times since the last central bank meeting. For example, MTS Bank did this, said Yevgeny Vyalkin, director of savings products at MTS Bank. "The last rate increase was on October 15 for a period of three months to one year," he added.
There are two reasons why banks continue to participate in the “yield race” for savings products. Firstly, these are expectations regarding the dynamics of base interest rates. “The Central Bank may signal that it is ready to raise interest rates by at least 20% and, if necessary, tighten policy. In fact, inflation is above the Bank of Russia’s forecast range. The situation on the labor market remains difficult, and the inflationary background is growing. The growing budget deficit in 2024 and the risk of repeating this scenario next year also speak in favor of tightening monetary policy,” says Anna Zemlyanova, senior analyst at Sovcombank.
Rodion Latypov, chief economist at VTB Group, recalled that after the September meeting, the Bank of Russia acknowledged the possibility of raising interest rates at the next meeting. "In eight out of eight previous cases, these signals were accompanied by growth at the next meeting. Therefore, it can be assumed that its growth is practically predetermined," the expert believes. According to VTB's forecast, the most likely scenario is an increase in the base interest rate from 19% to 21% in October.
A week before the meeting, the central bank sent another signal to markets that policy tightening was inevitable. Bank of Russia Deputy Chairman Alexei Zabotkin said on October 14 that regulators were not ruling out a scenario of a new interest rate hike.
"The bank's actions are sometimes based on verbal intervention by the Bank of Russia's management. For example, on June 7, the key interest rate was confirmed at the same level, which became a direct signal about the likelihood of its increase at the next meeting in July, as a result of which the bank almost immediately began to increase rates on deposits and savings accounts," Ivan Ukleyin, senior director of the Bank Ratings agency, told Expert RA.
The second reason for the increase in profitability is competition for depositors' funds. After increasing the limit on one-time transfers of funds between accounts via the SBP to 30 million rubles, clients will be able to withdraw all funds from one bank to another free of charge.
"Competition for new funds from depositors continues, and with the expansion of the transfer limit through the SBP to 30 million rubles, transferring funds from one bank to another has become much easier and safer, so banks monitor competition indicators. Banks offer clients the most attractive deposit lines," confirms Natalia Bogomolova, Director of Financial Institutions Ratings at NRA Rating Services. In addition, a gradual change in banks' approach to interest rates on savings products is expected in 2024. If earlier we made significant adjustments to our rates after the meeting, now we offer our clients ever higher profitability right before the decision of the regulatory authorities.
How much will interest rates rise by the end of the year?
If the baseline scenario of a tight monetary policy is implemented, interest rate increases will be inevitable. The main intrigue is how noticeable the increase will be. “The interest rates on deposits currently offered by some banks suggest an increase in the base rate by at least 20% per annum. At the same time, if the regulator implements the scenario expected by most market participants at its next meeting, I do not think this will lead to a significant change in deposit rates. On average, interest rates on deposits are 0.3– If regulators raise interest rates above 20%, the reaction of credit institutions will become more critical. At the same time, interest rates on deposits increase by an average of 1–1.5 percentage points. This is possible,” predicts Inna Soldatenkova, head of the specialized analysis department at Banki.ru.
An increase in the base interest rate in line with the bank's expectations could lead to a tariff adjustment, which some players are targeting and have postponed the revision until October 25, agrees Yegor Lopatin, director of the NCR financial institutions ratings group. If the base interest rate increases by more than 2 percentage points, we can expect a more noticeable increase in interest rates on deposits, including in large banks.
The National Rating Agency expects interest rates to rise by only 2-3 percentage points by the end of the year. Bank Dom.RF expects interest rates to rise by 1.5-2 percentage points from the current level. MTS Bank expects the average market maximum interest rate to rise to 22%.
"The limit of the interest rate on a deposit that a bank can afford varies from person to person and depends on the structure of assets and the type of financing. Thus, according to the statistics of the Bank of Russia, no cooling of lending in the corporate sector has been observed yet. The net interest margin allowed by banks is 4-5%," says Natalia Bogomolova.
Now interest rates are already above 20%, and lending continues, although for small amounts, says Anton Pavlov, Deputy Chairman of the Board of Directors of Absolut Bank. "One way or another, interest rates are marginal. Because lending at a rate of 22-23% is very risky and increases defaults. Based on this value, the limit of the interest rate on a deposit is 20%. Because in order to maintain financial stability, banks must work with a margin of at least 2-3 percentage points," the banker concluded.