The Central Bank records a decrease in the volume of citizens’ funds in accounts and an increase in time deposits

For the second month in a row, the Central Bank recorded a decrease in the volume of citizens’ funds in accounts and an increase in time deposits. This is a consequence of the actions of the regulator itself, which increased the key rate from 8.5% to 13% in August, which caused an increase in deposit yields. For banks, time deposits are more predictable liabilities, but the flow of funds from accounts is fraught with an increase in funding costs and a loss of interest margins.

On Monday the Central Bank published statistical data for the banking sector as of October 1. According to them, the growth of household funds in banks accelerated to 1% from 0.8% in August. In September, the volume of funds in citizens’ accounts showed a decrease for the second month in a row, while those in time deposits grew (both indicators grew from the beginning of the year until August).

At the end of September, individuals’ accounts accumulated RUB 15.05 trillion (a reduction of 790 billion rubles over two months), while on deposits the volume of funds by October 1 amounted to 25.87 trillion rubles. versus RUB 24.06 trillion. as of August 1, 2023.

As follows from the Central Bank’s commentary, in September the flow of funds continued from current accounts (minus 471 billion rubles, minus 3.4%) to time deposits (plus 959 billion rubles, plus 4.3%). The attractiveness of time deposits remained due to the increase in rates (to 10.19% at the end of September against 9.66% at the end of August) after the next round of raising the key rate (to 13% in mid-September). The main influx of funds came from short-term deposits of up to six months, for which banks offered the most attractive rates (reaching 13–14% per annum).

Individuals began to transfer money and also bring cash, while taking money from current accounts, as well as from long-term deposits and investing money in short-term accounts from a month to a year, notes ADB President Alexey Voylukov. “The main reason for the increased demand for deposits is the increase in rates on them, which are now fixed at a record level for this year,” notes Natalya Tuchkova, head of the Savings department at VTB. “Taking into account the possible continued growth of the key rate, the population’s interest in time deposits will increase” . According to the head of the development department of savings products at Alfa Bank, Natalya Voloshina, fairly high rates on deposits encourage clients to think more actively about placing deposits; moreover, the entry amount for many banks is at a fairly low level (at Alfa Bank, a deposit can be opened from amount 10 thousand rubles). “The flow of funds is not so great, because rates have increased on both fixed-term and current accounts,” notes Mikhail Matovnikov, head of the Sberbank financial analytics center. “At the same time, the trend may be spurred by another increase in the key rate and an increase in deposit rates following her”.

Banks, of course, are interested in increasing the share of time deposits in order to increase the stability and predictability of the resource base – that is, first of all, macroeconomic stabilization, says Managing Director of Expert RA Yuri Belikov.

At the same time, in the described conditions, banks record a forced increase in the cost of funding and attracting new liabilities, experts note. “This ultimately invariably leads to a reduction in the net interest margin and a slowdown in lending, as credit institutions seek to recoup increased costs on deposits with higher loan rates,” points out independent expert Andrei Barkhota.

For now, in the future, it is worth predicting a further strengthening of the trend of the flow of household money into deposits, since with a high probability the Central Bank will continue to raise the key rate in order to combat inflation risks, believes Gennady Fofanov, president of the investment platform InvoiceCafe. According to Mr. Barhota, the process of increasing rates and accelerating the growth of the resource base of banks, as well as its rise in price, is medium-term in nature and can last 6-12 months.

Ksenia Dementieva, Yulia Poslavskaya