What yield do banks offer on deposits in yuan

Having deposits in yuan is gradually becoming a habit among Russian citizens. And more and more banks not only offer such tools, but also begin to compete for customers with the help of rates. By the beginning of summer, rates on three-year deposits in a number of banks had already noticeably exceeded the level of 3% per annum and, under certain conditions, are approaching 4% per annum. However, market participants are waiting for rates to stabilize at current levels. Although some banks may improve their offerings to meet customer needs.

Yuan is in demand

Major banks have recently continued to raise rates on deposits in yuan (CNY). “Over the past few weeks, the yield on deposits in yuan has been increased by major players,” VTB states. In May, this was done by Sberbank, MKB, Bank St. Petersburg, RRDB, in early June – VTB and Alfa-Bank. By the beginning of summer, rates in Chinese currency at some banks reached 3.5% per annum, and in the premium segment – 4% per annum.

Due to sanctions risks and restrictions on access to settlements in Western currencies, Russian companies are replacing loans in dollars and euros with yuan, market participants note. “In order to issue loans in yuan, Russian banks need to attract this currency. Increasing rates on yuan deposits is a marketing tool for banks to stimulate the inflow of customer funds,” explains Dmitry Monastyrshin, chief analyst at PSB.

According to the Central Bank, since the fall of last year, the volume of loans in yuan began to exceed the volume of loans in “toxic” currencies. And in the first quarter of 2023, loans were issued in Chinese currency for more than 421 billion rubles, while in dollars and euros – in the amount of about 119 billion rubles. VTB’s portfolio of Chinese currency deposits reached CNY 9.4 billion in May, the bank said.

Timing is everything

One of the most common are deposits in Chinese currency for a period of three months to one year. Rates on annual deposits, according to data posted on the websites of banks, are 2-3% per annum. At the same time, banks are increasingly offering longer ones – for two and three years. And these deposits have the highest rates. For example, on three-year deposits in Sberbank, VTB, MKB, Bank Saint Petersburg, the rates are 3-3.35% per annum, and in Alfa-Bank – 3.85% per annum.

In a number of credit institutions, the rates are lower, but for such instruments they often offer either replenishment of the deposit or partial withdrawal of funds during its validity period. However, it cannot be ruled out that banks with lower rates will raise their level to higher values, including in order to maintain customer loyalty.

Status for items

At the same time, the minimum amounts for which you can open deposits in yuan vary widely. Often they amount to 0.5-1 thousand CNY (equivalent to 6-12 thousand rubles). And in VBBR, a deposit can be opened in the amount of 100 CNY. But in some banks (Sberbank, PSB, Rosbank) the minimum amount is 10 thousand yuan. Moreover, in individual banks, the size of the minimum amount depends on how the funds are placed. In any case, the minimum amount will be when placing through mobile applications, while in branches in some cases the minimum amount will be required 2-5 times more.

In order to receive a higher income on deposited funds, you need to upgrade your status, for example, to a privileged, or even better, to a premium client. For example, at Alfa-Bank for privileged clients, rates for comparable terms are higher by 0.1-0.15 percentage points (p.p.), at VTB, Sberbank, MTS-Bank – by 0.2 p.p., at RRDB — by 0.4 p.p. For premium clients, Alfa-Bank has higher rates by 0.4–0.45 p.p., VTB — by 0.3 p.p. But this status will require placement and larger amounts. For example, at Sberbank, higher rates are set for amounts from 100 thousand CNY, at RRDB – from 350 thousand CNY, at VTB – from 500 thousand CNY (for premium customers – from 1.5 million CNY).

The forecast is stable

At the same time, banks do not expect a noticeable increase in rates in the near future. “The movement of rates on bank deposits in yuan is determined mainly by domestic trends. At the same time, the process of developing channels for replenishing yuan liquidity from the financial system of China is actively underway,” Mr. Monastyrshin points out. In his opinion, in the short term, “it will be possible to maintain a stable cost of yuan funds in the market.” VTB also expects rates to stabilize at current levels in the future. ICB expert Yulia Alekseeva noted that the bank does not plan to change interest rates on yuan deposits in the near future.

Vlad Urgent