Banks are cautiously raising rates: Russians were told when it is better to open deposits

Banks began to increase the profitability of deposits after the regulator’s decision to increase the key rate. However, if the Central Bank of the Russian Federation raised this figure by 2% at once, surprising the market, then banks are also in no hurry to significantly increase interest on deposits. Many market participants increased the yield on savings by only 1%: mainly large state and commercial banks did this. But there are also financial institutions that have raised deposit rates by only a few tenths of a percent. Why this is happening and whether the banks’ policies will change before the end of the year, MK found out from experts.

The lag in the growth of interest rates on deposits from the increase in the rate of the Central Bank of the Russian Federation is a characteristic feature for the entire period since the end of July, that is, from the moment when the cycle of tightening the regulator’s monetary policy began. Thus, the maximum interest rate on deposits of ten credit institutions that attract the largest volume of deposits from individuals increased from the first ten days of August to the second ten days of September by only 1.6%, while the key rate rose during this period by 4.5%. If we analyze the data for the last week, we can see that the general approach of financial institutions and the formation of their deposit policies remains the same. Thus, according to the analytical center of the Moscow Exchange, over the past week deposit rates increased by only 0.08-0.12%. As a result, the average return on deposits is just over 11.2% per annum.

Another indirect sign indicating that Russians should not expect particularly high rates on deposits is the difference in the interest rates offered in “short” and “long” deposits. Thus, according to the Financial Services platform, short-term savings remain the most attractive. If for a year the average maximum rate on deposits in the 50 largest banks is 11.5%, then for six months it is already more than 12%.

Experts disagreed on why banks are in no hurry to raise deposit rates following the decision of the Central Bank of the Russian Federation. Some point out their disbelief that in the future the Bank of Russia will maintain the trend of increasing the key rate, and if so, then there is no need for the supervised regulator to change anything. “Banks are not trying to quickly increase deposit rates for the population, because they assess the situation with the rate increase as an emergency measure by the regulator, and not a long-term trend,” says Lazar Badalov, associate professor at the Faculty of Economics of RUDN University. “The fact is that the key rate is a guideline for banks’ interest policy, but this does not mean that they should set interest rates on deposits strictly in accordance with its size.” The scientist recalled that any bank is a financial intermediary that accepts money at a lower interest rate, and then places the same funds at a higher interest rate, and the difference is its own income. Accordingly, banks, when attracting deposits, must be sure that they can, for example, issue this money in loans at rates higher than interest on deposits. And now it is very difficult to count on high demand for loans, because the rates there have long been double-digit and high. Therefore, one should not expect a sharp and rapid increase in deposit rates: banks will increase them gradually as the demand for lending changes, Badalov believes.

The second group of experts is confident that financial institutions are hampered by their own sluggishness and focus on competitors to respond to the actions of the regulator. “Banks cannot quickly respond to an increase in the key rate due to internal approval procedures for proposals for clients,” says Associate Professor of the Department of Global Financial Markets and Fintech at the Russian Economic University. G.V. Plekhanov Denis Perepelitsa. “The second factor is the market environment, banks focus on each other, and when rates increase in one large bank, rates gradually increase in others.”

The third group of experts is confident that the rates have already been raised, just not for everyone. Credit and financial institutions, having room for maneuver, provide the most interesting interest rates on deposits to the groups of clients they need. “Banks offer “tasty” rates on deposits not to all depositors, but only to certain groups, for example, payroll clients,” says Natalya Milchakova, leading analyst at Freedom Finance Global. “Therefore, such offers are valid not so much due to the fact that the key rate has increased, but due to the fact that banks want to ensure the loyalty of certain target groups of consumers.” This hypothesis is partly confirmed by practice. Thus, in the largest bank in Russia the maximum rate increased to 14%, and in the bank bearing the name of a famous entrepreneur – to 14.1%. However, only clients with a special subscription can place money on such a deposit. For ordinary depositors, offers with a maximum rate of up to 12% are available. “We believe that the growth of interest on bank deposits will reach its peak by the end of 2023,” Milchakova predicts. “At the beginning of next year, in our opinion, the Central Bank of the Russian Federation will gradually begin to take pauses in raising interest rates, and banks will slow down the growth of deposit rates, which have already reached double-digit figures.” For those Russians who want to earn a high interest rate on their deposit, it is better to put money in the bank now, or divide the amount of savings, say, in half, and put half in now, and the other half closer to the New Year. The fact is that in December some large banks may have promotions, in particular related to deposits, and the Central Bank of the Russian Federation may once again raise the key rate, so it makes sense not to rush to put all your free money in the bank right now.

Average market estimates by experts agree that rates on deposits in Russian banks may increase by another 0.7-1.2%, depending on the term. “Deposit rates will reach their peak by the beginning of December, as banks will have time to update their programs and put out New Year’s offers,” Perepelitsa is sure. It is better for Russians to open deposits in the first month of winter, because the period of special offers from banks is limited, the expert advised.