OREANDA-NEWS. February 27, 2010. State corporation “Deposit Insurance Agency” (DIA) conducted households’ deposit market review for 2009. The following are the most meaningful trends:  

In 2009 households’ deposits in DIS member banks grew by RUR 1 579 billion. This is the maximum increment for all recent years. In relative expression deposits grew by 26.8% and reached RUR 7 464.3 billion (in 2008 the growth was by 14.7%).

Quarterly deposits growth dynamics during 2009 varied and could be defined as both - revaluation of their currency constituent and net deposit influx. However, based on the year-end results, ruble exchange rate changes practically did not affect deposit base growth, as ruble depreciation at the beginning of the year was to a great extent compensated by its subsequent appreciation. With this background as of the second quarter of 2009 net deposit influx became obvious, which testifies to restoration of public confidence in the banking system and growth of households’ savings.
Average deposit growth rate during the first 10 months of the year was RUR 2.9 billion per day. Starting mid November households’ resources influx grew faster under the influence of the New Year-eve bonus payments, which brought additional RUR 520 billion to the banking system during the last one and half months (33% of the total increment: while in 2006-2007 New Year-eve bonuses gave only 16-20% of the total annual deposit growth).
Almost half of the above resources (RUR 250 billion) was formed out of current and  demand accounts’ balances increase, which is a confirmation of their onetime, and, possibly, short-term presence in the banking system. It can be assumed that under conditions of interest rates going down – some portion of these resources in the near future would flow into securities or real estate markets. The above is confirmed, particularly, by the number of transactions concluded on the real estate market in December 2009 – January 2010.
In 2009 deposits amounting from RUR 400,000 to RUR 700,000 and from RUR 700,000 to RUR 1 million grew with the fastest rate. Their growth rate was 56.2% and 57% per annum (increment by RUR 348.6 and 135.3 billion respectively). The number of opened accounts within the above intervals went up by 52.8% and 58.1% (637,500 and 168,200 accounts). It should be mentioned that fast growth of deposits from RUR 700,000 to RUR 1 million in the year end, most likely, was temporary, as it was caused by New Year eve bonus payments.

Based on the year-end results, the share of deposits within the range between RUR 400,000 and RUR 700,000 grew from 10.5% to 13%, while the share of deposits within the range from RUR 700,000 to RUR 1 million – from 4% to 5% of the total volume. The growth of deposits in excess of RUR 1 million was significantly slower both in amounts (25.3%) and in their numbers (30.9%); as a result, their share went down from 32.9% to 32.5%.    
Average deposit amount within the range from RUR 100,000 to RUR 400,000 as of January 1, 2010 was RUR 185,300; for deposits from RUR 400,000 to 700,000 the average deposit was RUR 525,100; and for deposits from RUR 700,000 to 1 million – RUR 814,600. For deposits exceeding RUR 1 million the average amount was RUR 4 464,900. During the reported year insignificant growth of the average deposit within the range between RUR 100,000 and 400,000 was noticeable - only by 2–3%. At the same time average deposit within the range from RUR 700,000 to 1 million went down by 0.7%, and for deposits in excess of RUR 1 million – the reduction was more significant, the average deposit size decreased by 4.3%.
Review of deposit interest rates conducted by DIA in 100 largest retail banks showed that by the end of the first half of 2009 the rates reached their maximum level, and further began to go down. Consequently, based on the year-end results, 54 out of 100 banks reduced their deposit interest rates under the influence of decreasing inflation, massive households’ resources influx, and the Bank of Russia recommendations issued in the course of rate  monitoring.  

Average interest rate level (weighted by deposit volume) as of January 1, 2010 for ruble deposits of RUR 100,000 was 8.9% per annum (during 2009 it went down by one percent.); while for deposits of RUR 700,000 the rate was 9% (in 2009 it went down by 1.1 percent). Average (non-weighted) rates for above deposits were 13% and 13.3% per annum respectively (in 2009 they went up by 0.2 percent). In DIA opinion, ruble deposit interest rates will stabilize in 2010 at the level of 8% to 12% and will differ significantly for various groups of banks depending on availability of other sources to replenish liabilities. 
The year 2009 started with sharp growth of foreign currency deposits’ share: it went up from 26.7% of total households’ deposits as of the year beginning and reached 32.9% by April 1. The above change was caused by more attractive savings denominated in euro and US dollars as a result of ruble weakening in relation to currency box at the end of 2008 – in early 2009. However, from 2009 spring trends of ruble stabilization and its gradual appreciation were discernable. Consequently, by December 1, 2009 the share of foreign currency deposits went down to 27.9%.

According to DIA estimation, by 2011 with ruble rate stability maintained - the share of foreign currency deposits may further go down to 23% – 25%.
Based on the year-end results, the share of 30 largest banks by households’ deposits volume went up insignificantly – from 79.1% to 79.3%. While the Sberbank’s share went down from 51.8% to 49.4% against the background of other largest banks’ share going up, such banks as: VTB group, Alfa-Bank, Promsvyazbank, Rosselkhozbank. The above testifies to the fact that after the crisis depositors gave their preference to stability when placing their resources, which is associated with the largest and most well-known banks.   

Twenty retail banks with maximum deposits influx provided 64% of the total deposit growth in the banking system. Of which the fastest growth rate (from 50% to 155% during 2009) was demonstrated by largest banks attracting deposits with interest rate above 14%. However, interest rate level in itself did not guarantee big volumes of attracted households’ resources. Essential attractiveness factors were the bank’s size, multi-branch character and brand awairness.   
The highest deposit growth rate, based on the results of 2009, was notable in network multi-branch banks, it was 40.8%. The growth rate in banks with 100% foreign capital was 39.6%, and for banks of Moscow region it was 34.4%. The lowest deposit growth was demonstrated by regional banks, it was 24.4%.  
Given the deposit growth during 2009 the amount of DIA insurance liability (potential obligations to conduct insured deposit payouts) did not go down, but on the contrary it went up from 71.4% to 71.9% of the total deposits (without the Sberbank it went up from 54.1% to 56.9%). This was the result of the fact that majority of deposits were placed in amounts close to the maximum coverage level – RUR 700,000. The above testifies to the fact that the existing coverage level fully complies with the deposit structure in the banking system.   

 
According to DIA estimation, during 2010 absolute households’ deposit growth will be at the same level as in 2009 and will reach RUR 1 500 – 1 650 billion, which will correspond to the total deposit growth of 20%-22%. The total households’ deposit volume based on 2010 results is estimated to be RUR 9 000 – 9 100 billion. 

The above assessment is based on assumption of sound macroeconomic situation and sustained positive trends discernable on world financial and commodities markets with reasonable public income growth and gradual ruble strengthening in relation to currency box during the year. Also some slow down in the households’ saving activities is expected as a result of significant decrease in bank deposit yields.  

Based on 2009 results, negative influence of the crisis on the households’ deposit market can be considered as coming to an end with its main consequence being a more vigorous and cautious households’ saving behavior.