Deposit rates began to decline

At the beginning of the year, favorable conditions for citizens developed in the deposit market. The vast majority of banks offered individuals returns on short-term ruble deposits that exceeded official inflation. However, at the end of last January, the first alarm bell sounded – a number of large players lowered rates for the first time in a long time. According to experts, in February there will still be an opportunity to fix deposit rates at attractive levels.

As Freedom Finance Global leading analyst Natalya Milchakova told MK, last January money could be placed on deposits at 13–14% per annum. At the same time, many highly reliable banks offered ruble deposits with an interest rate of 17% and even 18% per annum. However, as a rule, it was possible to place funds at such high interest rates for a period of three to six months, after which the interest rate began to decrease by 2-3 percentage points. A number of banks offered to place funds at a high interest rate only to new clients, and some, on the contrary, only to clients receiving a salary or pension from this bank. “In general, it can be seen that compared to December 2023, the growth of interest on deposits has slowed down, and deposits with the highest interest rates are intended only for certain groups of depositors. Banks are apparently preparing for the fact that the Central Bank of the Russian Federation will soon take a pause in raising the key rate,” Milchakova emphasized.

In mid-January, independent experts recorded the first signs of a “cooling” in the deposit market. According to the Financial Services platform, the yield on annual deposits and six-month deposits fell by half a percentage point. As explained by Vadim Shamin, deputy director of the retail business department of Svoy Bank JSC, this may be due to a reduction in the need for liquidity among some banks, as well as the expectation of the Central Bank’s transition to lowering the key rate and the desire to reduce the cost of funding in the medium term. “The pre-New Year rush of depositors, who sought to place funds on deposit before the New Year holidays, had already subsided in January, which is why the deposit rate is decreasing,” added Milchakova.

According to BCS World of Investments expert Lyudmila Rokotyanskaya, today the key rate of the Central Bank, and therefore the average deposit rates, is higher not only than inflation, but also higher than the population’s inflation expectations for the next 12 months. In her opinion, in the first half of 2024 it is most advisable to place funds in rubles. Next, it is necessary to monitor the state of the state budget, oil prices and the dynamics of the ruble.

As Natalya Milchakova believes, deposits and savings accounts with maximum interest rates are now profitable, especially those where you can partially withdraw and replenish the deposit and leave interest for capitalization. But it’s not easy to find an investment with such favorable conditions. “Therefore, you can put money on a deposit for a period of, say, 3 or 6 months, when the maximum interest rate applies, and after the deposit expires, having received interest, you can always transfer the money to another bank or to another, more profitable deposit,” – the analyst advises.

According to Vadim Shamin, when the key rate stabilizes and is expected to decline, it is more profitable for clients to place deposits for longer periods – for 1 year or more, in order to lock in a high deposit rate. But you need to remember the basic rule – “don’t put all your eggs in one basket.” “It is better to open several deposits with different terms and, if necessary, with different currencies in order to form a personal portfolio. And if you urgently need part of your savings, then you will not lose all the interest, but will be able to withdraw the funds and save some of the interest already accrued on another deposit,” Shamin noted.

In his opinion, in the first half of 2024, the deposit market will continue to grow due to high rates on deposits, rising wages and social benefits, as well as the population’s transition to a savings model of behavior due to high rates on consumer loans and mortgages. At the same time, the new tax on deposits will not affect the demand for deposits, since it affects a small share of depositors and is levied only on the amount of interest that exceeded the maximum key rate on the first day of any month of the year, multiplied by 1 million rubles, Shamin said. By the end of 2023, only those clients who have earned interest in excess of 150 thousand rubles will have to pay tax on the amount of excess interest on deposits and other accounts.

Interestingly, yesterday the Federation Council proposed abolishing the tax on income from long-term deposits in the Russian Federation in order to stimulate long-term investments by citizens. We would like to add that on February 1, 2024, a law came into force according to which Russian banks are required to inform depositors free of charge about the expiration of deposits.

According to the experts surveyed, the main factor that will influence the attractiveness of deposits in the near future will be the monetary policy of the Bank of Russia. According to the forecast of Maxim Timoshenko, director of the department of operations in financial markets of Russian Standard Bank, the first reduction of the Central Bank’s key rate may take place as early as the second quarter. “If in February the Central Bank gives a signal that, with all the reservations, it is ready to start a rate reduction cycle, this will provoke a fairly significant reduction in deposit rates. Thus, now depositors have the opportunity to fix deposit rates at the still attractive levels offered by the market,” Tymoshenko concluded.

Published in the newspaper “Moskovsky Komsomolets” No. 29210 dated February 6, 2024

Newspaper headline:
Depositors heard a signal from banks