End of the placement race. Banks withdraw the best offers
In October last year, the interest rate on deposits reached 8%. “The problem with liquidity is so big that banks are fighting for deposits” — said Leszek Skiba, President of Pekao in an interview with ISBnews. Although the interest rate still did not keep up with inflation, and the offers were limited (e.g. time-limited, available only for new funds or limited amounts), many Poles willingly deposited their savings in banks to at least mitigate the loss of savings.
As we wrote in Business Insider Polska in early January, Recently, the growth rate of interest rates on new bank deposits has slowed down and if the Monetary Policy Council does not return to raising interest rates, the profitability of term deposits will probably not increase significantly. The more so that banks have a large surplus of liquidity, i.e. an advantage of deposits over loans.
HRE Investments even notices that January is the first month in a long time in which the average interest rate on the best deposits fell. “In December 2022, promotional deposits allowed to earn an average of 7.54 percent. It is now 7.3 percent. The difference may not be great for now, but the appetites of savers with double-digit inflation are still far from being satisfied.
“In most cases, we are dealing with leaving the offer unchanged, withdrawing some products or lowering their interest rate. Just a month ago, offers that tempted with a rate of return of 8 percent. or more, there were 17. In the first month of 2023, there are two fewer such offers. There are more products with lower interest rates. Those whose offer does not exceed 8% already account for more than half of the best deposits.
HRE analysts emphasize that January 2023 is another month in which the MPC left interest rates unchanged for the fourth time in a row. “This is why most banks have not increased the interest rate on their products or have decided to lower it. There is a clear relationship between rates and interest rates on deposits. Similar relationships will probably be observed in the coming months. As the current quotations of futures contracts (FRA) suggest, interest rate cuts this year cannot be ruled out.
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