OREANDA-NEWS. February 14, 2011.  The State Corporation “Deposit Insurance Agency” (DIA) conducted households’ deposit market review for 2010. The following are the most significant changes:

• In 2010 households’ deposits in DIS member banks grew by RUR 2,334 billion. Thus, during the reported year they grew by 31.3% and reached RUR 9,798.3 billion (in 2009 the growth was by 26.8%), which corresponds to the DIA adjusted forecast for 2010 – 30%.

Without revaluation of deposits denominated in foreign currencies the growth would be by 32.1%, that is, on the whole its influence during the year was almost nominal. Interest capitalization contribution in the deposit growth during 2010 is assessed as 7.1 per cent.

The public savings activities were at high level during the whole year. Daily deposit increment in January–November 2010 on average was RUR 5.2 billion, which significantly surpassed the similar indicator for the previous year (in January–November 2009 it was RUR 3.2 billion a day).

As usual, significant share in the public resources inflow was made by bonus and other payments based on the year end results. Consequently, deposit growth in December amounted to one forth of the whole annual inflows, with the volume of “New Year payments” estimated at RUR 430 billion. In 2009 it was significantly higher – RUR 520 billion.

According to DIA base scenario, during 2011 public resources placed in the banking system may increase by RUR 2.6–2.8 trillion, which will correspond to the total deposit growth by 26.5–28.5%. The total amount of households’ deposits in banks by the end of 2011 is estimated as RUR 12.4–12.6 trillion. The above estimation is conditioned to the absence of changes in the public savings behavior and continued trend on the deposit market discernable during the past year.

At the same time the conservative scenario takes into account possible slow down of deposits growth resulting from growing concern of depositors about negative actual profitability of deposits not covering the rate of inflation, and for this scenario DIA estimates the possible increase in total deposits by RUR 2.4–2.5 trillion, or by 24.5–25.5% to reach RUR 12.2–12.3 trillion.

• In 2010 the share of deposits within the range from RUR 400 to 700 thousand grew from 13% to 13.8% of the total deposits; within the range from RUR 700 to 1 billion – the growth was from 5% to 6.2%; and deposits exceeding RUR 1 billion grew from 32.5% to 35.5%.

The above changes can be explained by the fact that during the reported year deposits within the range from RUR 700 to 1 billion showed the fastest growth rate, it was by 63.2% by deposit volume, and by 62.9% in the number of opened accounts. The second place was taken by deposits exceeding RUR 1 billion – during the year they grew by 43.5% in volume, and by 52.4% – in the number of opened accounts. Deposits within the range from RUR 400 to 700 thousand also grew above average – during 2010 they went up by 39.8% in volume and by 38.6% – in the number of opened accounts. At the same time during the forth quarter of 2010 the growth rate for the above deposit groups converged and came closer to 10.5 – 12.5%.

Based on the year end results the average deposit size within the range below RUR 100,000 grew by 4.9% (and reached RUR 3,900); within the range from RUR 100 to 400 thousand – by 1.6% (up to RUR 188,200). Within the range in excess of RUR 1 million – the average deposit size notably went down by 5.8% (to reach RUR 4,205.500). With regard to all other ranges under review the average deposit size practically remained unchanged, which testifies to sufficiently uniform deposit growth.

• Deposit interest rate monitoring conducted by DIA in 100 largest retail banks has shown that during 2010 they continued to go down, as was notable since the beginning of the year. Based on the year end results 99 banks decreased their interest rates.

The average interest rate level (weighted by deposit size) as of January 1, 2011 for annual ruble deposits below RUR 100,000 was 5.6% per annum; for deposits up to RUR 700,000 – 5.8% (reduction during the year by 3.3 and 3.2 per cent respectively). Average non-weighted interest rates for deposits below RUR 100,000 were 7.5%; for deposits below RUR 700,000 – 7.7% per annum (reduction during the year by 5 per cent per annum).

Thus, based on the year results, as it was initially predicted by DIA – the average interest rate for ruble deposits turned out lower than the inflation rate (8.8% - consumer price index for 2010).

It should be noted that in the forth quarter of 2010 there were cases of deposit rates going up. The above can be the first sign of their reaching the bottom line.

• In 2010 with the background of smooth ruble appreciation to currency box, the share of deposits denominated in foreign currencies significantly went down - from 26.4% as of January 1, 2010 to 19.3% as of January 1, 2011. It should be noted that the reduction took place at faster rate during the first quarter – from 26.4% to 21.5%. According to DIA estimate by the end of 2011 the share of deposits denominated in foreign currencies may further go down to 14-16%.

• During the reported year the share of 30 largest banks by the volume of deposits of individuals continued to go down – from 79.3% to 78.5%. Above all, the change was due to the Sberbank share going down from 49.4% to 47.9%.

• In 2010 the largest deposit growth was notable in Moscow region banks – by 60%. The growth of households’ deposits in multi-branch network banks (without the Sberbank), as well as in regional banks took place at a similar rate: by 20.9% and 29.6% respectively. During the reported year the Sberbank’s deposits grew by comparable 27.2%. The lowest growth of households’ deposits was observed in subsidiaries of foreign banks (with 100% non-resident participation in the capital) – by 11.2%.

During the forth quarter the difference in deposit inflow rate with respect to bank groups was notably reduced, it was within the range of 8–12%. One of the factors accounting for the above might be deposit interest rate reduction and converging in the banking system as a whole.

• The results of 2010 show that the share of long-term deposits in excess of one year went up from 63.7% to 64.7% as of January 1, 2011.

• The ratio of DIA insurance liability (insured part of household’s deposits) during 2010 went down by 2.4 per cent – from 71.9% to 69.5% of the total households’ deposits. Without the Sberbank the above share reduced even less – by 2.1 per cent from 56.9% to 54.8%. These indicators are still at the level reached when insurance coverage limit was raised in 2008.