Summer dollarization: why citizens remembered on currency deposits

Contributions grow

The volume of deposits in July increased by 1.7%, increased to 23.4 trillion, showing this year the maximum increase, according to the Bank of Russia. The dynamics of this one summer months have significantly improved the outcome of the entire segment — collectively for seven months of 2016, the volume of deposits increased by 1%.

The growth of the population started four months ago. “For the majority of citizens’ deposits — the only alternative to try to save. A year ago, the Russians are buying dollars, but now began a period of strengthening of the ruble, so many people prefer deposits, despite their declining profitability,” says Director of methodology RAEX (Expert RA) Marina Musiets.

Most notably in July increased deposits in foreign currency, whose volume increased within the month by 5% to 6.22 trillion rubles, the Share of foreign currency deposits has increased from 25.7 to 26.5%. According to calculations by the chief economist of Alfa Bank Natalia Orlova, the net inflow of foreign currency from citizens in July amounted to about $2 billion According to her, the volume of deposits in dollars amounted to $94.4 billion “Apparently, the population fears devaluation of the ruble and trying to play the volatility of the currency market”, — the expert believes. She also notes that the company in contrast to citizens, by contrast, reduce the amount of funds in foreign currency.

The growth of foreign currency deposits could be provided by small banks, which have kept rates higher in comparison with the market leaders level, says S&P analyst Sergey Voronenko. Deputy Chairman of Absolut Bank Tatiana Ushkov, notes that it is primarily “old investors” who have opened a Deposit a year or two ago with a higher yield. “Now they just replenish their deposits. The inflow of new foreign currency investors we do not see” — said the banker.

It is noteworthy that the appetite for the savings of Russians is growing on the background of the active reduction of Bank interest rates. Since the beginning of year the maximum yield of deposits in the top 10 largest credit institutions decreased from 9.9 to 8.82%. The next wave of falling interest rates came in July: as I wrote last month , nine of the 15 largest by volume of deposits banks have reduced rates on deposits due to the increase of reserve requirements of the Central Bank. For ruble deposits, the reserve ratio increased from 4.25 to 5%. On a currency — from 5.25 to 6%.

“Citizens are now seeking to save, not spend, therefore increasing their deposits,” — said the head of Deposit products home Credit Bank Nadezhda Kulikova. However, according to her, in August, the inflow of deposits in banks could be reduced, as in July, banks have actively reduced interest rates. The strongest cuts maximum rates on annual deposits in rubles, which yield on average, according fell 0.17 p. p. to 8.57% per annum. Rates on deposits in us dollars decreased on average by 0.13 points to 1.6%.

Russians choose dollars

Most of the banks surveyed (the survey was conducted among the top 50 largest by volume of deposits of banks, the share of deposits in liabilities of which exceeds 40%) said that in July their volume of deposits in foreign currency has not changed. “The growth in banking sector is associated primarily with the volatility of the exchange rate and the foreign currency revaluation”, — said the Deputy Director of Department of development of retail products of the Bank Natalia Menshova. According to her, customers have generally put money in rubles.

In HKF Bank said that interest rates on foreign currency deposits was reduced at the end of may. “In July, the foreign currency equivalent in dollars of the amount of deposits in our Bank remained at the same level in the Euro has slightly decreased,” — said Kulikov.

However, a number of bankers reported the flow of funds into foreign currency deposits. In VTB 24 in July investors have brought on foreign currency deposits 41.9 billion rubles “the market remains In a downward trend in the profitability of the deposits, therefore, beneficial to citizens open savings accounts at current rates. This is one of the key factors of growth of deposits in foreign currency”, — told in the press service of VTB 24. In addition, in July the Bank increased the yield on some deposits in the currency for a term up to 1 year.

VTB 24 also said that in July, the volume of ruble deposits almost did not change.

In Tinkoff Bank noted a flow of a part of rouble deposits into foreign currency, which, according to representatives of the Bank, due to the introduction of multi-currency deposits.

The growth of deposits in foreign currency in July was also observed in Uniastrum Bank: the share of deposits in dollars increased by 14.15% (excluding currency revaluation) while the share of deposits in euros decreased by 1.59%. In the middle of July, the Bank lowered Deposit rates in dollars, from 3.25 to 2% per annum. According to the Vice-Chairman of Uniastrum Bank Alla Tsytovich, one-third of Deposit growth has provided major clients with a Deposit of $150 thousand In the conditions of increased inflation risks and the continuing economic downturn, investors are trying to preserve their savings by converting from roubles in currency”, — she comments.

In the Bank “FC Opening” they say that although in July, the Bank twice lowered interest rates on ruble and foreign currency deposits, among the clients demand for dollar deposits. “Some customers, for example those who were on vacation and did not understand what will happen with the ruble, decided to play safe and place all funds in foreign currency”, — said the head of passive and Commission products of the Bank “Opening” Alexander Efremov.

Despite the announced “de-dollarisation in the banking sector, there are factors that encourage the population to save money in the currency, the Director of the Institute of strategic analysis FBK Igor Nikolaev. According to him, population tends to save storage, but faith in the end of the crisis the citizens are not. In addition, as the expert believes, in the second half of the year, the weakening of the ruble, and it also stimulates the transfer of savings in foreign currency.

The rate of growth is not a hindrance

The trend of the second half of 2016 — growth of volume of deposits of physical persons with the continuing downward trend in their profitability, experts say. In Bank predict that by the end of the year the volume of deposits of the population may increase by another 4% taking into account currency revaluation. Alla Tsytovich expects to continue to rise and foreign currency deposits, since other alternatives to keep their savings in foreign currency citizens have almost none.

The growth of foreign currency deposits will depend on the volatility of the dollar/ruble, it is believed in the Asian-Pacific Bank. “If the exchange rate will be stable, sharp fluctuations we do not anticipate, if the ruble will become cheaper, the volume of foreign currency deposits will grow. But what we’re not expected is the fall of the inflows of foreign currency deposits,” — said Director of retail business ATB Alexander Paramonov.

For further Deposit growth is also expected on further reduction of interest rates on deposits. “In the coming months, the ruble rate will not change,” — said the Director of the Institute of strategic analysis FBK Igor Nikolaev. According to him, the return of dollar deposits banks already lowered to a minimum.

Chief analyst of Sberbank Mikhail Matovnikov, by contrast, expects growth of foreign currency deposits. “Shift into the currency of citizens forced the devaluation expectations. But they did not justify itself, so to speak about this trend as sustainable has no basis”, — the expert concludes.

The Bank of Russia and ASV more optimistic expectations. In particular, the regulator expects that the growth of household deposits in 2016 may slightly exceed 15%. “I think it will be a little more than 15%. We can talk about percentage points,” — said in may the Chairman of the Central Bank Mikhail Sukhov (quoted by “Interfax”) DIA’s Forecast — Deposit growth at the level of 14-16%.

In 2015, the volume of deposits of individuals grew by 25.2%.