Russians brought more than a trillion rubles to banks

Russians are actively getting rid of cash and putting money into banks. In February 2024 alone, funds in citizens’ accounts and deposits increased by 1.1 trillion rubles or 2.5%, the Bank of Russia estimated. Meanwhile, such an increase is atypical for this month. It has become a record since 2016, as noted in the regulator’s review. Are people doing the right thing and what risks do such tactics carry? How long will the trend last, and for what period is it better to put money in the bank? Experts told MK about this.

Valery Tumin, member of the expert council on the development of the digital economy under the State Duma Committee on Economic Policy: “In Russia the key rate of the Central Bank is now quite high. Therefore, many banks offer quite favorable interest rates on deposits. In my opinion, this explains the fact that in February Russians opened bank deposits worth 1.1 trillion rubles. I believe those who did this were motivated by a desire to protect their assets and gain profitability. At the same time, there is a trend that those citizens who have money in foreign banks are also beginning to transfer their savings to Russian banks. Capital repatriation has also contributed to record open deposits and the overall strength of our country’s economy. I don’t see any risks in such tactics, but I’ll still remind you about diversification: in other words, you don’t need to “put all your eggs in one basket.”

This trend is now at its peak and, it seems to me, will soon begin to fade away. Many experts believe that in April the Central Bank will begin to ease monetary policy, and following the reduction of the key rate, rates on bank deposits will also begin to fall. So the yield on deposits will decrease. As for the terms, “short” deposits are traditionally popular in Russia – up to six months. However, with the current rate, it makes sense to open a medium-term deposit or even invest money for a period of more than a year to guarantee the best return.”

Anastasia Chumak, co-head of investor rights protection practice at Intercession: “The rate of 16% per annum with minimal risks looks attractive for those who want to preserve their savings. And one more factor is a possible rate cut, which was discussed before the last meeting of the Central Bank to date. This did not happen, but at that time, sensing such a possibility, the Russians tried to catch it before conditions changed. Briefly, three factors: good conditions, low risks, a feeling of limited supply. It is important to remember that the deposit amount insured by the Deposit Insurance Agency (DIA) is 1.4 million rubles per bank, so when choosing such an instrument as a deposit, it is logical to use it in several banks, thereby securing your savings.

The main risks are a currency jump, which will cover 16% of the deposit, and the same inflation. But as long as the Central Bank rate is at this level, and there are similar offers from banks, the trend will continue. Before the next meeting of the Central Bank, it is logical to expect the same excitement. Banks now offer both short-term and long-term deposits. If you are planning a large purchase, then calculate the investment time for it. As a rule, for a long term the bank rate is below 16%, since few people believe that the Central Bank rate will remain at this level for the whole year.”

Yulia Khandoshko, CEO of the European broker Mind Money: “Given the fact that the key rate is expected to be cut soon, it is logical that people massively took money to banks to benefit from high interest rates. This is why the rate is raised in order to dry up the economy from excess money and prevent inflation.

This trend will last until the summer, until the rate begins to decline. The Central Bank is worried that the exchange rate will increase sharply and inflation will begin to gallop. In this regard, the rate will remain at least until the summer. There is no idea yet what awaits Russia by the fall, so it is logical that Russians invest their money in a deposit to save themselves from unnecessary risks. The recipe is simple when choosing a deposit – fix a high rate for the longest possible period.”

Sergey Solovykh, head of the department for working with wealthy clients at Fontvielle Investment Company: “It is not surprising that the influx of funds from Russians into ruble accounts is growing. I would say that there are 2 groups of factors for this: limiting and stimulating. Limitations include the narrowing of investment opportunities for Russians due to sanctions pressure on Russia. Among the stimulating factors, I would include, firstly, social payments and funds received by those who are related to the SVO.

They again need to be directed somewhere, and banking products become the most understandable direction. Secondly, the high key rate remains a stimulating factor, which has been at 16% per annum since December 2023. As long as the regulator’s tough rhetoric in the monetary policy continues, banks will offer double-digit yields on their products.

Thus, the maximum rate of financial and credit institutions from the top 10 is 14.7% at the beginning of March. If we study all the statistics of the Central Bank for this indicator, that is, over the last 15 years, then we observed an average rate above 14% for banking products only four times: in 2009, then at the end of 2014 and beginning of 2015, then briefly at the beginning of 2022 years and now.

Moreover, all previous increases were associated with crisis events in the Russian economy; the beginning of 2024 in this sense differs from all other periods. Russians will continue to have interest in banking products and the stock market if all the above factors remain the same.”