Business news from Ukraine

UKRAINIAN BANKERS EXPECT REDUCTION IN DEPOSIT RATES

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.

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