Banks are selectively raising rates on yuan deposits

Banks continue to raise rates on deposits in yuan, but this time selectively. The maximum return that investors in the Chinese currency can expect is up to 4%. According to experts, now only those banks that have a request for Chinese currency from corporate businesses are ready to pay more for the yuan to retail clients.

Recently, two large banks announced an increase in rates on deposits for individuals in yuan. Thus, Uralsib increased the rates on deposits of the “Income” type in Chinese yuan for all placement periods to a maximum of 4% per annum, taking into account the monthly capitalization of interest. He increased the rates on deposits in yuan, although for premium clients, and the Credit Bank of Moscow, the maximum return on deposits in Chinese currency for such clients is now 4.5% per annum. The bank offers lower rates to the ordinary depositor. Among the ten largest banks, VTB was the last to increase rates on yuan deposits – on November 3 to 3.8%.

Now the maximum yield on deposits in yuan (without taking into account status and capitalization), according to Banki.ru, is offered by Rosbank – 3.95%, Metallinvestbank and Alfa Bank – 3.85%.

The last massive round of increases in rates on yuan deposits was recorded in the summer of this year. Since then, rates have increased slightly – then the maximum yield was 3.5%. Subsequently, against the backdrop of an increase in the Central Bank’s key rate, banks mainly increased the yield on ruble deposits. Thus, according to the Central Bank, in the first ten days of November the arithmetic average of the maximum rates on deposits in rubles of the top 10 banks reached 13.57%.

Whether the increase in rates on yuan deposits will become widespread now is still a question. Most of the largest banks surveyed by Kommersant did not respond to the request. However, there are prerequisites for a new round of rate growth. So, on November 13, for example, the head of Rosbank Natalya Voevodina noted that the bank plans to increase rates on deposits in yuan for individuals. “Ingosstrakh Bank is actively developing lending in yuan, in our bank the portfolio growth in the third and fourth quarters was about 70%,” says Oleg Chernyshov, deputy chairman of the board of Ingosstrakh Bank. “We are carefully analyzing the attraction market, and a similar decision may be made in the future … in order to ensure a balanced growth of demanded services from clients – legal entities.” VTB already raised rates on deposits in Chinese currency at the beginning of November, they noted. Further dynamics will depend on market conditions and customer requests.

Nevertheless, the Chinese yuan is strengthening its position in the portfolio of classic liabilities of Russians. According to VTB estimates, in the banking market as a whole in 2023, the portfolio of yuan savings of individuals will grow by 60% and reach 70 billion yuan. The Chinese currency will take up about a quarter of clients’ foreign currency savings, and in 2024 the share of the yuan could exceed 45%.

Experts are more cautious in their assessments. “Most likely, these banks balance assets and liabilities by currency (for funding large loans or yuan settlements) or attract foreign currency funds with hedging, which turns out to be cheaper than ruble funding at 14–15%,” notes the director for bank ratings of the Expert RA agency. Ivan Uklein. “In any case, against the backdrop of a general increase in banking market rates in the fall of 2023, this is a normal situation.” According to the managing director of the NKR rating agency, Mikhail Doronkin, the current increase in rates may be due to increased business demand for loans in yuan against the backdrop of rising rates on ruble loans. “We can hardly expect a massive increase in rates on deposits in yuan, the currency is volatile, and if several banks have raised rates, this is most likely due to the capabilities of these banks; most likely, they have increased their share in this currency in international payments, so attracting yuan became profitable for them, which means the rate increase is justified,” agrees Gennady Fofanov, president of the Invoicecafe investment platform. In general, a deposit in yuan is a relatively reliable investment that guarantees a small income and protects in the event of a depreciation of the ruble, the expert concludes.

Ksenia Dementieva, Olga Sherunkova