Deposit rates will not change significantly in the next few months

Interest rates on bank deposits in Ukraine after the steady downward trend, that was obvious since the beginning of 2013 and almost reached the "bottom" in July, will not change significantly in the next few months – believe the bankers surveyed by the agency "Interfax-Ukraine".

In the next two or three months deposit rates will not change significantly. Due to the fact that banks' credit risks remain high and banks continue to clean up their balance sheets of distressed assets, no significant loan growth in the near future will happen, so the deposit rates will remain virtually unchanged.

Banks are not ready to significantly reduce deposit rates as a short-term excess liquidity in the absence of long-term resources increases the risks for banks. Banks fear that the high liquidity of the banking system is a temporary phenomenon, so significant changes in the deposit market are not expected. In August and September rates traditionally go up due to increase in business activity, but dramatic changes are not expected.

The Executive Director of the First Ukrainian International Bank Stephan Guglieri believes that by the end of the summer deposit rates may reduce by 1-1.5% pp on deposits in local and 0.3-0.5% pp on deposits in foreign currency.

Source: Interfax