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Sunday, October 23, 2016

When you start to fall rates on deposits

Respondents “EV” experts suggest to open a Deposit now, while banks offer relatively high interest rates. In the fourth quarter, the situation for investors could deteriorate.

photo: Mikhail Kovalev

The economic crisis in the country has either passed, or we are still groping for the bottom, but overall the economy has adapted to low oil. Nobody expects the depreciation of the dollar and the lifting of sanctions. However, there is one indicator that suggests that the banking sector returns to its pre-crisis state. Interest rates on loans and deposits returned to the level of 2014. The decline in inflation suggests that not far off a time when deposits in banks will be offered under single figures.

After a peak of the “perfect storm” a year and a half ago the banks at the first opportunity tried to lower interest rates, sometimes it is more active in some periods there was a relative stabilization.

The latest wave of cuts was developed after the reduction of the CBR key rate from 10 June 2016. At the same time, most active players on the market currently to accumulate a sufficient volume of funds of depositors, and no need for active attraction of new customers. Banks return to lending, retail in particular, on the background of the difficult economic situation and high requirements for potential borrowers — quickly increase the volume of lending difficult. New loans do not have time to compensate for the volume of closing — so there is no urgent need in liabilities. “Now the market bets of active players are very close to the psychological threshold of 10%. Until the end of the year, with high probability, this threshold will be passed and we will see 9-9,5% at the most popular deposits for 1 year,” — said the head of management of retail products Loko-Bank Nadezhda the White.

In a contraction of the credit market, the bankers have ceased to show a significant demand for liquidity. This led to the fact that they have to restrain the growth of their portfolios of deposits, reducing rates. Because consumer demand generally and the demand for retail loans in particular remains limited, it can be assumed that the demand for deposits by banks will also be low. “Most likely, the tendency to gradual reduction of interest rates this year will continue. Recommendation I can give to people in these conditions, is simple: the right thing — to open a Deposit now, thereby fixing the yield from the placement of their savings,” — said the head of Deposit products of the Bank “home Credit” Nadezhda Kulikova.

Agrees with her and Paul complex Department of OTP Bank. He strongly recommends to open deposits in rubles, as the trend for lower rates will persist for some time — probably until the end of the 3rd quarter of 2016. “The main factor behind the decline in Deposit rates was the change in the key rate of the Central Bank against the background of emerging trends in the stabilization of the economy and the banking sector. In addition to the interest rate of each Bank affected by the growing volume of liquidity. Since June 10 in the big banks interest rates had fallen by 0.6 percentage points,” told the first Deputy Chairman of the Bank “Russian Standard” Evgenie Lapin.

Summer is traditionally not the most active season for the borrowers, therefore, many banks are not interested in attracting liabilities. Along with the growth in lending in the fourth quarter, the market also aktiviziruyutsya and from the point of view of attraction of deposits. Really no reason to wait — better to act now, when in the market there are still deals on deposits at 12% per annum from banks from the top 20. Perhaps this is a good chance the following summer to remove the interest due and to go on vacation. Thus it will be possible to solve two problems at once — profitable to place money and at the same time to solve the problem with the savings for a family vacation.

After the regulator tightened supervision over banks and they began to pursue a more balanced credit policy, the gap between rates on deposits between market leaders and average people is literally 1.5–2 percentage points, that is, we see the unification of this process. In this case, the customers need to pay attention to the service: for example, the ability to conduct transactions through mobile banking, which allows you to minimize the office visit.

A single recommendation for all clients is not. In the presence of the savings up to 500 thousand rubles alternatives to Bank Deposit or not. To wait for higher rates now inappropriate, therefore, for this category of customers the best option — contributions to roubles for 1 year. “If the amount of savings is more, it is possible to consider other options for investment, including more profitable. In any case, any accumulation should be — so if not, then it’s time to start saving. Even if it is 3-5 thousand rubles per month,” says Hope White.

It is clear that the lower interest rates on deposits, particularly in the larger banks, people will look at other proposals that are on the market. The us stock market is evolving at a rapid pace because the deposits in local financial institutions amount to 1-2% per year in line with inflation, so the banks in this case play the role of savings, not income, says Artem Deev from Amarkets.

In order to get a good passive income, is the stock market, which allows you to get a much greater return. In the US, even earning 10% is considered a good indicator of the Manager’s work, while we have a guaranteed income from placing funds in the Bank when inflation is high. “The lower rates customers are showing more interest in investment products that may show higher yields than deposits. It could be bonds, and structured products”, — said Vitaly Bagmanov of BCS Ultima.

That is why in the West, popular mutual funds, similar to our mutual Funds, they give you the opportunity to invest in a certain asset in the stock market and assume a passive position, shifting means on the measure of how successful investments.

It is difficult to say how long the downward trend in contributions. Much will depend on the monetary policy of the regulator, inflation and external factors that affect the exchange rate, that is oil prices. Last week the ruble has dealt a painful blow: fall only stopped at around 66 rubles per dollar. Therefore, further rate cuts will depend on how quickly the economy can go let small, but steady growth. While this trend expressed so implicitly that constantly leads to disputes between economists. In this case the rate will go down even more confident, so best to act now, the main thing — not to be mistaken with the choice of the Bank.

“When choosing a Bank it is necessary to pay attention to its place in the banking system, a developed branch network, the possibility for easy refill. Now one Bank offers several deposits, so you should read the contract carefully, including looking at the validity of the Deposit” — sums up the acting CEO of the Bank Ugra Dmitry Shilyaev.

Negative dynamics

The maximum interest rates on ruble deposits top 10 Russian banks by volume of attracted deposits of physical persons in the third week of July fell by 0.03 percentage points to 8.82%, said the Central Bank. According to his estimates, starting in 2016, new rate was reduced by 1.28 percentage points — from 10.1% at the end of December 2015.

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