DIA Releases Private Deposit Market Analysis, Q3 2014
OREANDA-NEWS. The State Corporation Deposit Insurance Agency (DIA) has analyzed the private deposit market developments in Q3 2014. The major trends are as follows.
Saving Activity
In Q3 2014 the amount of funds of individuals in Russian banks increased by RUR 414.3 billion to RUR 17,297.5 billion (in Q3 2013 the increase was RUR 313.7 billion). The deposits increased by 2.5% in relative terms (in Q3 2013 the increase was 2.0%). In the absence of a foreign currency revaluation the increase would have been 0.2%.
The amount of funds attracted through bearer saving certificates increased by RUR 22.7 billion (6.6%) to RUR 365.1 billion in the reporting period. In total during the last year, investments in saving certificates grew by RUR 32 billion, or by 9.6%. As a result, investments in this type of uninsured financial instruments practically ceased influencing the general dynamics of deposits.
In its turn, the total amount of insured deposits in Q3 increased by RUR 404.5 billion (by 2.4%) to RUR 17,121.6 billion.
Since the beginning of 2014 the DIA has been insuring bank accounts of individual entrepreneurs. As of October 1st they amounted to RUR 206.9 billion (1.2% of the total amount of individuals' deposits), remaining almost unchanged since the beginning of the year. The deposit insurance liability of the Agency to them amounted to RUR 112.7 billion, or 54.5% of the total amount of deposits placed by individual entrepreneurs. The above demonstrates that the structure of their deposits by size corresponds, all in all, to the general market structure of individuals' deposits.
Overall the total increase in deposits since the beginning of the current year has amounted to RUR 340 billion (2%) (in January-September the increase amounted to RUR 1,703 billion or 12%). The relative share of interest capitalization during the 9 months is estimated at 4.5 pp.
According to DIA's forecast based on deposit market trends that existed in the first half of the year, the amount of individuals' deposits can increase by RUR 1.2-1.5 trillion or by 7-9%, in 2014.
Structure of Deposits by Size
In Q3 2014 those deposits whose amount was slightly above the coverage limit, namely those from RUR 700 thousand to 1 million, had the highest growth rates: a 8.2% increase both in terms of the deposit amount and of the number of opened accounts. There was also an increase in deposits whose amount ranged from RUR 400 thousand to 700 thousand and over RUR 1 million - by 4.2 % and 3.7% in terms of the amount and by 3.8 and 1.5% in terms of the number, respectively. Deposits from RUR 100 thousand to 400 thousand remained unchanged in terms of their amount and decreased by 2.9% in terms of the number of accounts.
As of the quarter end the share of deposits of over RUR 1 million increased from 39.6 to 40.1% of the total amount of individuals' deposits. Deposits of RUR 700 thousand to 1 million increased from 7.8 to 8.2%, and the share of deposits of RUR 400 to 700 thousand increased from 18.1 to 18.5%. The share of deposits of RUR 100 thousand to 400 thousand decreased from 22.3 to 21.8%, and the share of deposits of below RUR 100 thousand decreased from 12.2% to 11.4%.
As of October 1, 2014 the average bank deposit amount less minor and dormant accounts increased from RUR 104 thousand to RUR 107 thousand.
Return on Deposits and its Impact on Deposit Dynamics
The monitoring of interest rates on deposits with the 100 largest retail banks demonstrates the smooth growth of return on deposits. As of the end of Q3 2014 over half of the banks (65 out of 100) raised their interest rates. 11 banks reduced their interest rates and 24 banks had them unchanged. Return on deposits accelerated as compared to Q1 and Q2.
As of October 1, 2014 the average level of interest rates (weighted by deposit amount) on one-year rouble deposits of RUR 700 thousand increased by 0.5 pp and is estimated at 8.1% per annum. Average (unweighted) interest rates for one-year deposits of RUR 700 thousand increased by 0.5 pp to 9.8%, having reached their maximum since the beginning of 2010.
According to DIA, interest rates on deposits might continue to grow somewhat in near future due to the shortage of liquidity in the banking sector.
Structure of Deposits by Currency and Maturity
In Q3 2014 the share of foreign-currency deposits increased from 18.9% to 19.8% as of October 1, 2014. This increase was caused by a material foreign exchange revaluation. In foreign currency terms the reporting quarter saw a decrease in the amount of foreign-currency deposits.
In Q3 the share of long-term deposits (with maturities of over 1 year) increased from 63.4 to 64.3%. The share of fixed-term deposits with maturities of less than 1 year remained almost unchanged at 18.4%. And the share of demand deposits decreased from 18.1 to 17.3%. So depositors favoured more profitable long-term instruments.
Concentration of Deposits
In Q3 the share of 30 banks with the largest amounts of individuals' deposits somewhat decreased, amounting to 78.5%; among them the share of Sberbank decreased from 46.3% to 45.7%.
Network and regional banks had the highest rates of deposit growth, by 4.0%. Deposits in the Moscow Region's banks increased by 1.9%. The amount of Sberbank deposits grew by 1.2%.
DIA Insurance Liability
In Q3 2014 the amount of DIA insurance liability (contingent liabilities to pay insurance indemnities) decreased by 0.7 pp to 65.0% of all deposits. Excluding Sberbank of Russia, the amount of DIA insurance liability decreased from 54.6 to 54.3%.
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