Expert opinion

The cut in the key policy rate to 13%, as well as a slight reduction in the rate on 3-month certificates of deposit by 0.5% to 16%, will not have a major impact on the yield on hryvnia deposits. It is expected that by the end of the summer, average rates on hryvnia deposits will be at the level of May-June and will amount to 13-14% per annum. At the same time, the growth of new deposits may slow down somewhat.

 

This was stated by Dmytro Zamotayev, Director of Retail Banking Department of GLOBUS BANK, a member of the AUB.
The expert predicts that in July and August, the differentiation of rates on hryvnia deposits will depend mainly on the term of deposits.

Thus, according to him, the average rates on deposits from 3 months to 6 months will be 12% per annum, the average yield on deposits for a period of 9 months to 12 months will be at the level of 13-14% per annum, rates on deposits up to 1.5-2 years will yield an average of 14-14.5% per annum, and the highest yield is expected for deposits for a period of 2 to 2.5 years, with rates reaching 15% per annum.

At the same time, he reminded that in May, rates on ultra-short-term deposits decreased significantly - by an average of 3-4% and no longer exceed 6-7% per annum for deposits of 1 month and up to 10-11% for deposits of up to 3 months. The expert attributes this to the intensification of bank lending, as the June cut in the discount rate to 13% significantly reduces the cost of resources for potential loans: that is, most banks have a real opportunity to revive their lending programs, expanding their range from consumer loans to car loans, targeted lending to small and medium-sized businesses, and mortgages.

"In the summer, the bank deposit segment will remain relatively "static" in terms of rates and new depositors. However, as we predicted at the beginning of the year, there will be a noticeable reorientation of banks from the development of ultra-short deposits (1 month to 3 months) to longer deposit programs, from 1 year to 2.5 years. It is quite possible that by early fall their share will reach 25-30% of total deposits," said Mr. Zamotaev.

However, according to the expert, in July and August, several important interrelated factors may affect the level of profitability of hryvnia deposits, in particular:

1. Inflation rate. The impact of rising electricity tariffs and the expected increase in excise taxes on fuel may lead to an objective increase in consumer prices, which will automatically affect inflation. Thus, in May, inflation amounted to 0.5%, and in the first 5 months of the year - 2%. However, the acceleration of inflation by the end of the summer is possible within the range of 1-1.5% per month, and this rate is quite acceptable (according to government officials, annual inflation should not exceed 8.2%).

    

2. The key policy rate and the rate on 3-month certificates of deposit. The key policy rate is expected to remain at 13% until at least the end of the summer, and the rate on 3-month certificates of deposit is also expected to remain unchanged at 16%, which forms the basis for the yield on hryvnia deposits.

    

3. The situation on the foreign exchange market. It is expected that during the summer period, the "controlled" devaluation of the hryvnia will be quite moderate and will not exceed 0.5-1% in total, and closer to September, the corridor of dollar fluctuations will shift towards 41-41.5 UAH/$.

    

4. The level of "net" return on deposits. It is expected that closer to September, the net return on hryvnia deposits, taking into account inflation and the necessary bank fees and taxes, will be quite high and will average 4-5%, which may encourage people to place funds on hryvnia deposits.

    

5. War circumstances. An indirect but important factor that, along with economic factors, may affect the activity of citizens who plan to place funds on deposits.

The banker believes that by the end of 2024, the economic situation in the country will remain quite favorable for the further development of hryvnia deposits. In addition, for the vast majority of citizens, hryvnia deposits remain the most acceptable and understandable mechanism for generating passive income.

"Despite the expected and predicted devaluation processes observed in April-May and likely to continue in the fall, it is unlikely to significantly affect the intentions of citizens not only to preserve but also to increase their wealth. That is why hryvnia deposits will remain an optimal, understandable and quite profitable mechanism for this purpose," summarized Dmitry Zamotayev.