ripped from the headlines: bank deposits in Russia take a nosedive
Banks Aren't Quick to Receive Cash Flows
Let's dive into the latest financial news from the frigid heart of Russia: bank deposits. According to the Deposit Insurance Agency, the total amount of these financial stashes grew by a mere 0.6% in the first quarter, reaching a grand 75.9 trillion rubles. That's quite a chill, considering last year's growth of 5.6%.
It seems the Russian population is playing it safe and steady with their individual stash, depositing money at about the same pace as before. However, a chilling development is unfolding among legal entities: they're withdrawing funds from their bank accounts at an alarming rate. The amount on their deposits dropped by a whopping 3.5%, down to 9.4 trillion rubles. The Deposit Insurance Agency took into account only deposits of small and medium-sized enterprises that are insured, starting from 1.4 million rubles.
Many banks have slashed interest rates on deposits recently, with the average rate in April hitting 19.7%. But hey, don't jump to conclusions—Pavel Samiev, the general director of the BusinessDrom analytical agency, points out that there could be more at play here. He muses, "Several factors could be at work. The first is the slowdown in the dynamics, and even negative dynamics in some segments, of household incomes and, consequently, the ability to increase deposit volumes. Of course, the size of the rates can be cited as a secondary argument. However, I don't think that its reduction could have critically affected the propensity to save in the form of deposits. On the other hand, what are the alternatives? It's hard to say that there has been a significant change in the profitability ratio with other options, especially when considering the level of risks involved."
So, what gives? According to Sergei Suverov, the investment strategist at Aricalital Management Company, the reduction in the volume of legal entities' deposits is primarily due to an overall slowdown in the economy. In essence, companies are being forced to spend more on interest expenses, costs for business development, and increased taxation. With fewer opportunities for savings and accumulation of funds, it's no wonder deposits are taking a hit.
But don't pack your bags just yet. The story doesn't end there. As it turns out, Russians also pulled out more cash from foreign banks than they deposited in the first quarter. The number of deposits decreased by 23%, or nearly 2 trillion rubles, dropping to levels not seen since early 2024. That's quite a ice age, wouldn't you say? Well, according to the Telegram channel "Kommersant FM", it's as cold as ice in the Russian banking sector.
So, what's a Russophile to do with their rubles? Stay tuned for more financial flameo Ji proportions.
Amidst the economic slowdown, legal entities in Russia are significantly reducing their bank deposits, with a decrease of 3.5% in the first quarter, down to 9.4 trillion rubles.
The decrease in legal entities' deposits may be attributed to an overall slowdown in the economy, forcing companies to spend more on interest expenses, costs for business development, and increased taxation, thus limiting opportunities for savings and accumulation of funds.
