Residents’ deposits in Ukrainian banks in January this year decreased by 2.1%, or UAH 49.2 billion, to UAH 2 trillion 345.9 billion, a decline in deposits recorded for the first time since August 2022, according to statistics from the National Bank of Ukraine.
According to the statistics, household deposits fell by 2.5%, or UAH 27.4 billion, to UAH 1 trillion 50.9 billion in January. The previous decline was recorded in May and January last year, but then it amounted to less than UAH 1 billion and less than UAH 4 billion, respectively.
The NBU clarified that both hryvnia deposits decreased by 2.6%, or UAH 18.8 billion, to UAH 692.2 billion, and foreign currency deposits decreased by 2.1% in dollar terms, or $0.20 billion, to $9.47 billion.
In the first month of the new year, business deposits decreased by 1.7 percentage points, or UAH 21.8 billion, to UAH 1 trillion 259.5 billion. This was due to a 3.5% or UAH 32.5 billion drop in hryvnia deposits to UAH 884.85 billion. At the same time, foreign currency deposits in dollar terms increased by 3.2%, or $0.31 billion, to $9.89 billion.
The average rate of new hryvnia deposits for households remained unchanged at 11.7% in January, while for the corporate sector, after a pause in December, it dropped by 0.3 percentage points (pp) to 9.9%, returning to the level of November 2022.
As for foreign currency deposits, their yield for individuals remained at around 1.0% per annum for the fourth month in a row, while for legal entities it gained 0.2 pp, returning to the level of August last year – 0.7% per annum.
In January, the six-month-long upward trend in the loan portfolio was also interrupted: it decreased by 0.5%, or UAH 4.76 billion.
According to the regulator, the reason for this was a decrease in the loan portfolio of legal entities by 1.2%, or UAH 8.88 billion, to UAH 748.10 billion. The largest outflow of loans was recorded in foreign currency: the portfolio decreased by 2% in dollar terms, or $0.12 billion, to UAH 6.23 billion, while in national currency, the portfolio decreased by 0.7%, or UAH 3.51 billion, to UAH 512.35 billion.
At the same time, the loan portfolio of individuals grew by 2.1%, or UAH 4.76 billion, to UAH 227.31 billion due to an increase in hryvnia loans by 2.3%, or UAH 4.90 billion, to UAH 215.49 billion, while the foreign currency portfolio again decreased by 0.9% to the equivalent of $312 million.
According to the National Bank, interest rates on hryvnia loans to businesses and individuals increased by 0.6 percentage points to 18.1% and 0.9 percentage points to 34.6% per annum, respectively. At the same time, interest rates on foreign currency loans for legal entities increased by 0.3 percentage points to 6.7%, and for individuals, on the contrary, fell by 1.4 percentage points to 5% per annum.
According to the central bank, interbank and overnight lending rates decreased by 0.4 percentage points in January, to 14.6% and 14.5% per annum, respectively.
As reported, on December 15, the NBU cut the discount rate and the overnight DS rate from 16% to 15% per annum, the three-month DS rate from 20% to 19%, and the refinancing rate from 22% to 21%, and kept the rates at this level by a decision dated January 25.
Ukraine’s annualized inflation rate fell to 4.7% in January this year from 5.1% in December and November.
The National Bank of Ukraine (NBU) at the 15th auction for placement of three-month certificates of deposit (CDs) at 25% per annum on Friday, July 14, sold them for UAH 26.07 billion, while the volume of redemption of CDs placed at the second auction on April 14 amounted to only UAH 8.87 billion.
As reported on the NBU website, as a result, the volume of three-month DCs in circulation began to grow again and reached a new maximum of UAH 175.44 billion.
The number of buyers, as a week ago, amounted to 43, the regulator specified.
The central bank pointed out that last Friday the volume of overnight DS sales amounted to UAH 355.71 billion, compared to UAH 373.92 billion a week earlier. On the other days of last week, the NBU placed them in the amount of UAH 331.1-337.8 billion.
As reported, the National Bank said on March 16 that from April 7 it decided to lower the rate on overnight certificates of deposit from 23% to 20%, but at the same time to place DCs for a period of three months at a discount rate of 25%, depending on the volume of deposits attracted by banks for a period of three months or more.
On the eve of the debut auction, the NBU set for banks individual initial limits for the purchase of three-month DC at the level of 70% of the balances of individuals’ deposits in the national currency in these financial institutions as of April 4, with an initial term of 93 days or more.
The regulator explained that to the initial limit is added the second dynamic part – multiplied by the multiplier “3.0” increase in the volume of such a portfolio of hryvnia deposits of individuals for 93 days after April 4.
Banks can apply for purchase of three-month DS both from the NBU and in the interbank market within the above limit. The National Bank places them weekly on Fridays.
In the inflation report, the NBU specified that as of April 4, term deposits in the national currency for a period of three months or more were worth the equivalent of UAH 154.5 billion, or 26.9% of all deposits, for a period of up to three months – UAH 40.4 billion, or 7%, while UAH 378.4 billion, or 66%, accounted for demand deposits.
According to the head of the National Bank Andriy Pyshnyy, the share of term deposits reached 35% at the end of May, while the share of deposits with maturities of 3 to 12 months in the total volume of new term deposits increased to 76%.
The NBU also said in mid-June that it plans to study the revision of 3-month deposit multiples in July.
State-run Oschadbank (Kiev) has increased the volume of term deposits from the beginning of the full-scale war until the end of 2022 by 7.4% or 5.2 billion UAH – to 70.6 billion UAH in all currencies, the head of the bank Sergei Naumov said on Wednesday.
“As of the end of 2022 we have plus on humble deposits from the beginning of the big war 5.2 billion UAH to 70.6 billion UAH (in all currencies). This trend continues now: already this year we have added UAH 500 million (in equivalent) to this portfolio,” he wrote in his Telegram channel.
He pointed out that the hryvnia deposits from February 24 last year increased by 5.7 billion UAH.
Naumov expects that the deposit base of Ukrainian banks will continue to grow, as well as deposit rates.
Oschadbank was founded in 1991. Its sole owner is the state.
According to statistics from the National Bank of Ukraine (NBU), on November 1, 2022 on the size of total assets Oschadbank took 2nd place (270.806 billion UAH) among the 67 operating banks in the country.
The National Bank of Ukraine (NBU) has increased from UAH 50,000 to UAH 100,000 (equivalent) the monthly limit on the purchase of non-cash foreign currency by citizens with subsequent placement on an irrevocable deposit for at least three months.
“Such changes will further reorient the demand of the population from foreign cash to non-cash, because transactions for the sale of non-cash currency by banks are carried out at a rate closer to the official than for the sale of cash, more convenient and safer,” the NBU website said on Friday.
As reported, with the outbreak of war on February 24, the National Bank banned the sale of non-cash currency to citizens, and on July 21 partially allowed it – up to UAH 50,000 per month on an irrevocable deposit of three months.
The Kyiv Economic Court denied a private company a claim for the use of mineral resources – one of the largest deposits of lithium ores in Ukraine, the press service of the Prosecutor General’s Office (PGO) has reported.
“It has been established that a private company, despite the requirements of the legislation and in the absence of a subsoil use license, without holding an auction, filed a lawsuit against the State Service of Geology and Subsoil of Ukraine seeking to recognize the right to use of the Shevchenko deposit of lithium ores in Donetsk region and remove obstacles to its use,” PGO said.
Justifying his position, the prosecutor insisted that the enterprise was illegally trying to get the Shevchenko deposit for the extraction of lithium ores.
Interest rates on deposits in 2020 will continue to decline and may reach 10% in the hryvnia and 1.5% in U.S. dollars, bankers said at a roundtable of the Financial Club on Thursday, May 21. “The trend to reduce interest rates will be examined until the end of the year. Interest rates will decrease,” Board Chairman at Idea Bank Mykhailo Vlasenko said, specifying that the bank’s current interest rates at 12-14% may drop to 8-10%.In turn, Capital Markets Director at Alfa-Bank Tetiana Popovych expects interest rates not to fall below 10%.
“Rates will drop, but in the short and medium term, I still see two-digit rates,” she said.
According to Deputy Board Chairman of TAScombank Oleh Poliak, the financial institution maintains deposit rates in hryvnias at about 11%, and in U.S. dollars at 2%.
“The trend is going down, I think it will remain at the level of 10-11%, in U.S. dollars will be about 1.5-2%,” the expert said.
Chief of the retail business department at Globus Bank Dmytro Zamotayev said that the bank lowered rates last week and plans to continue to decline following the market.
“We want to see the average interest rate about 10%, the ceiling rate of 11% at the end of summer,” he said.
Zamotayev said that at the moment the ceiling passive rate of Globus Bank is 12.75%.
“The rate in hryvnias will be around 11% by the end of June, and if we talk about the currency, when we made the forecast, it will be about 1.5% in U.S. dollars,” deputy chairman of the board at Forward Bank Andriy Prusov said.
He also said that during the lockdown period, about 90% of customers began to place deposits through Internet banking.
According to financial director at Alliance Bank Taras Kravets, the rate may reach 12% by the end of 2020.
“I will support my colleagues that the cost will decrease, but how fast it will depend on how quickly the economy overcomes the effects of the virus,” he said.According to Poliak, it is very important what kind of financial institutions take the first step in lowering rates.
“I believe that these should be state-owned banks, because they have the support of the government,” he said.
The expert believes that lowering rates in the future to 7-8% will not entail the active customer attrition if they see that the bank that serves them provides the customers with a market offer.
Prusov shared his opinion, who believes that lowering rates will not be an obstacle for customers and they will continue to place deposits in hryvnias in banks.
“I would like to say in confirmation of these words that according to the statistics of the NBU, it is obvious that over the last years, customers have placed more funds in hryvnias in banks, even without interest at all. In fact, trust is growing, and there are on-demand deposits on current accounts and their amount is growing every year,” he said.
