Major financial institutions decrease deposits and lending activities
lets dive into the latest happenings in the banking sector here in russia! on june 6th, the bank of russia slashed the key interest rate from 21% to 20% for the first time in almost three years, aiming to combat easing inflationary pressures and signs of a sluggish economy. but wait a minute, have our banks caught up with this move? not quite yet! after the bank of russia's decision, major russian banks have yet to make substantial adjustments to their deposit rates.
so what does this mean for your savings? well, according to reports, alpha bank was the first bank to take action, cutting rates by 2 percentage points (p.p.) on several deposits. follow suit were sberbank, sovcombank, mts bank, and t-bank. the mortgage rates have already been reduced by sberbank, "rossiya," and VTB by 1-2 p.p., with average market mortgage rates in early june standing at 26.5% annually for new construction and 26.7% for the secondary market.
but why are banks taking so long to review their loan terms, you ask? well, it's all about the central bank's stance on combating household debt and the impossibility of unilateral changes to deposit rates, as explained by olga pavlinova, deputy manager of Rosdorbank's St. Petersburg branch.
with that being said, the yield on six-month deposits in major russian banks fell below 19% for the first time since october 2024, to 18.92%, according to RBC and data from "Finuslug." however, three-month deposit rates remain above 19%, but are also in the midst of a downward trend, dropping 0.22 p.p. to 19.39% week-over-week.
expert analysis suggests that deposit rates may eventually follow the trend of the key rate, but the speed of adjustment depends on factors like the pace of inflation decline and market conditions. while there might be a future downward trend in deposit rates, immediate adjustments aren't apparent yet.
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In light of the Bank of Russia reducing the key interest rate, major Russian banks have yet to make substantial adjustments to their deposit rates, causing concern for individuals' savings. Interestingly, while mortgage rates have been reduced by some banks, deposit rates haven't followed suit, indicating a slow response from the banking sector to the central bank's move.
