Russian banks will have to significantly reduce their deposit rates, head of the ranking service at the National Rating Agency (NRA) Sergei Grishunin said.
According to the NRA forecast, the average interest rate on deposits at Russia’s ten largest banks will be moving down to around 3% per annum, or below the inflation level.
Head of the Analytics at Alpari, Alexander Razuvayev, agrees that the yield on bank deposits will become negative by the end of the year. Prices will rise so quickly they will erode any income earned from bank deposits, writes Finanz.ru. The government will be dealing with its economic problems at the expense of Russian investors, Razuvayev emphasized.
Promsvyazbank analyst Dmitry Monastyrshin also believes low deposit interest will help the government boost its budget after it has lost most of its income. Interest on loans will also go down, which means they will become cheaper. However, most Russians will not be able to take advantage of this change because banks are cutting most of their consumer lending programs.