Russian banks began to raise interest on deposits with maturity periods of more than three years. Financial institutions are promoting their long-term deposit products trying to avoid a sharp reduction in the maturity of their deposit portfolios amid outstripping growth in interest rates on short-term deposits, Frank Media reports citing the Bank of Russia’s commentary on Monetary Conditions and Monetary Policy Transmission Mechanism.
Interest on bank deposits, as well as on other banking products such as mortgages is growing with the Central Bank’s key rate, explains Artyom Deyev, head of analytics at AMarkets.
This year alone, the regulator raised its rate from 7.5% to 15%, the expert adds.
Money has become more expensive for banks, which makes them raise interest rates to attract more household funds. In addition, retail clients began to withdraw cash from their long-term deposits to use it as a down payment amid record mortgage activity.
“So far, deposits with maturities of up to one year are the most popular with bank clients. However, in light of record high rates, I can assume that the popularity of longer-term deposits will now begin to grow,” the analyst concludes.