Expert's answer on the popularity of hryvnia deposits

Dmytro Zamotaiev, Director of the Retail Business Department at GLOBUS BANK, named several main reasons for the steady popularity of hryvnia deposits, which, according to his forecast, will continue in May:

1. In conditions of low inflation, which amounts to only 3.2% annually, taking into account banking fees, the net income from hryvnia deposits opened during April-May, depending on the term of placement of funds, can average 6-7% per annum.
2. Hryvnia deposits in terms of profitability and net profit exceed foreign currency deposits on average by 3 times, as the optimal rate for deposits in US dollars does not exceed 1.8% per annum, and deposits in euros will only yield 1.6-1.4% per annum.
3. Hryvnia deposits are characterized by a simple, understandable, and easy-to-process mechanism for generating passive income (for example, opening a deposit through a mobile application takes only a few minutes).
4. Opening a hryvnia deposit allows you to receive additional bonuses on top of standard rates, maximizing income. Such bonuses amount to 0.5%-1% per annum.

The expert believes that the reduction of interest rates on hryvnia deposits gradually leads to the transformation of this segment: on the one hand, the economic situation prompts banks to develop longer-term deposit products, gradually reducing ultra-short-term deposit programs, and on the other hand, it strengthens citizens' trust in the banking system and the national currency overall.

"Of course, the growth of term deposits of individuals is not and cannot be static: for example, during 2023, the volume of funds placed in hryvnia deposits increased on average by 19%. And from January to April of this year, this indicator increased by only 1-1.5%. Obviously, the segment of banking deposits is gradually approaching a plateau, which is neither a good nor a bad sign: there are no 'crazy' rates anymore, and moreover, there is a gradual reduction in ultra-short-term deposits and an increase in longer-term deposits," he said.

In addition, in the expert's opinion, the main trend of 2024 is the winding down of currency deposit programs by banks and a concentration on deposits in the national currency.

"Hryvnia deposits, in terms of profitability and net profit, have displaced foreign currency deposits because for almost a year, most clients have been using placing funds in foreign currency bank deposits not as a means of earning, but as a convenient 'safe' storage of savings. Therefore, further development of foreign currency deposit programs will be rather sluggish — without expectations of a sharp increase in their popularity," Dmytro Zamotaiev concluded.