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Inflow of Household Deposits to Ukraine’s Banking System Accelerates in June

10 July 2018

Press Release

 

In June, banks were more active in attracting household deposits. This can be seen from the preliminary Monetary Statistics data for June 2018. Households’ hryvnia deposits in solvent banks rose by 5.9% to UAH 262.9 billion, while foreign currency deposits (in USD equivalent) increased by 1.1% to USD 8.5 billion. The active attraction of households’ deposits was due to the rapid growth of wages and the further increase in private money transfers from abroad. Furthermore, the continued substantial difference in yields on deposits in both domestic and foreign currency amid the virtually fixed UAH/USD exchange rate contributed to the inflow of hryvnia deposits.

 

By contrast, legal entities’ deposits in solvent banks decreased in month-on-month terms. The decrease occurred in both hryvnia (by 5.6% to UAH 243.8 billion) and foreign currency deposits in USD equivalent (by 1.3% to USD 5.1 billion). These changes were mainly driven by scheduled transfers to the state budget from business entities that have state corporate rights in their authorized capital.

 

Thus, the total portfolio of hryvnia deposits remained nearly unchanged in June, at UAH 506.7 billion.

 

Banks’ loan portfolio in the domestic currency decreased by 1.4% to UAH 584.9 billion.

 

This was due to a decline in hryvnia corporate loans (by 1.8% to UAH 468.2 billion), as the retail loan portfolio remained almost the same in month-on-month terms (UAH 116.7 billion).

 

In June, most banks’ interest rates remained virtually the same in month-on-month terms.

 

Banks continued to compete for corporate customers, causing a slight rise in interest rates on corporate deposits in the domestic currency by 0.2 pp to 11.6% p.a. The cost of legal entities’ hryvnia loans rose by 0.1 pp to 17.1% p.a., which reflected an increase in demand for loans, the working capital loans in particular.

 

The cost of household hryvnia deposits remained virtually the same in month-on-month terms (10.8% p.a.) due to the stable inflow of households’ funds. By contrast, interest rates on retail loans rose by 0.6% following a rise in large banks’ credit standards for loans with the maturity of over a year. However, this was offset by the reduced cost of short-term deposits.

 

In late July, read more on the main trends of the money market in June 2018 in the Macroeconomic and Monetary Review (July 2018).

 


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Last modification   10.07.2018