Kazakhstan Deposit insurance Fund (KDIF) has approved the maximum recommended rate on deposits in tenge in August 2020.
In short: the interest in almost all types will fall. And significantly – from 0.4 percentage points to 1.3 p. p. And it will happen for the fourth time in a row. One of the reasons is the change in methodology for determining the maximum threshold. Now
the upper limit on all deposits depend on the level of the basic rate (currently – 9,5%) to which is added a certain spread
“The innovation is aimed at reducing systemic risks with the aim of preserving the financial stability of banks. It will support the cost of Bank funding at an optimum level, avoiding excessive overestimation relative to the base rate and increase in interest costs, indirectly stimulates the growth of interest rates on credits”, — explained in the KDIF.
Savings deposits: at year is better than two
Traditionally, the most profitable stay savings deposits – deposits, withdraw money, with which up to the end of the term is problematic (statement must be submitted in advance Deposit is fully refundable, and almost all accumulated reward burns).
The maximum percentage on them will be in August to 14.5% (base rate + 5 percentage points), provided that the contribution opens for the year and will not be replenished. In July, the maximum percentage is 14,9%.
The maximum percentage for two-year deposits fell even more – from 14.9% to 14.3% (without replenishment)
Likewise, reduced the ceiling for contributions with possibility of replenishment – now he will be 12.4% for 12-month deposits and 12.3% for two years. Thus:
- First annual deposits will be more attractive than a two-year
- Rates on savings deposits with replenishment will return to the level of November 2019
- The annual fee on savings deposits without replenishment will be at a minimum since March, two years from November 2019
“Note that the banks retained the ability to adjust Deposit rates according to their assessment of financial and economic situation.
If the maximum rate of interest taking into account the average market rate developed above the prescribed limit, the maximum recommended rate adopted value of the limit,” — noted in KDIF.
Savings deposits at 3 and 6 months will be less attractive. In may the maximum interest on them amounted to 14%. In August, the limit was set at 11% (no recharge) and 10.5% (with replenishment). This is the lowest level since at least August 2019.
Term deposits: meaning less
Term deposits are more flexible – there is complete or partial withdrawal with loss of remuneration. But the reward for them is much lower.
In August, the maximum recommended interest rates on fixed deposits for 12 months, will remain at the same level. This is 11.1 per cent with no increase and 10.4% with reinforcement. And everything else interest will drop significantly.
“Rates on deposits with a maturity of 24 months, calculated based on the weighted average of interest rates will decrease and will amount to 9.5% without replenishment and 8.7% with the right of replenishment.
Significant reduction of interest rates on these deposits indicates a low interest and uneconomical maintenance of increased rates from banks,” — noted in KDIF.
Thus, the situation is as follows:
- All types of term deposits with the completion in August, the reward will be at least a year. Similarly, on deposits without replenishment for a year and two years. More short-term (3 and 6 months) will return to the level of November 2019
- Lower rates than fixed deposits with replenishment none other kind of deposits. This is the worst option of opening Deposit
- Annual term deposits without replenishment a little more attractive than short-term savings.
- Two-year deposits without replenishment – the worst option of investing money in the Bank. The maximum percentage of them in August to 9.5%. This is less than three and six-month (10%). And along with the fee on term deposits, which are much more convenient for Bank customers
Term deposits: at the level of the fall
Speaking of term deposits – interest on it to 9.5% (as in September-October 2019), that is, the level of base rate. In July, the maximum rate is 10% and in March-April briefly reached 13%
“The decline in August, the maximum recommended interest rates on non-urgent and short-term deposits in tenge – this is the final stage of a slight decrease in rates, the KDIF commenced in may this year.
We will remind that earlier the Fund decided to increase the spreads to lowered base rate followed by a gradual decrease. This measure was necessary to prevent negative impact of changes in the underlying rate yield in this category of deposits and the Deposit market as a whole”, — noted in KDIF.
In General, Bank deposits are losing their appeal. The current rates far above current levels of inflation (annual inflation in June amounted to 7%), but the real return is less. However, the fact that banks no need to raise interest rates, says that Kazakhstan is ready to carry the money in banks.