Changes in the deposit market: banks expect lower rates in 2024
30 January 2024 16:54
Keeping funds on deposits may become less attractive. Ukrainian banks are planning to reduce interest rates on deposits in the first quarter of 2024, according to 
According to a study by the National Bank of Ukraine, 69% of banks expect to cut interest rates on corporate deposits, while 50% expect to cut interest rates on retail deposits.
According to the survey, the average cost of funding has been declining for the second quarter in a row. Two-thirds of the banks surveyed noted a decline in the cost of business deposits, while rates on retail deposits and wholesale borrowings remained almost unchanged over the quarter.
Banks also noted a decline in the share of foreign currency funding over the past year. More than half of the respondents have the same expectations for the first quarter. In the fourth quarter, the maturity of funding slightly decreased. Banks expect it to remain unchanged over the next 12 months.
According to the NBU, in the fourth quarter of 2023, there was an increase in customer accounts, especially in the section of liabilities to households. There was also an increase in wholesale funding. At the same time, the cost of liabilities declined due to lower corporate deposits.
In the fourth quarter of 2023, the cost of household deposits and wholesale funding remained stable. In early 2024, financial institutions expect the cost of borrowing from businesses and households to decline further, while forecasting that funding volumes will remain stable.
The decline in the share of foreign currency liabilities was an important trend that is expected to continue in the first quarter of 2024. Capital in the banking sector has increased over the past year, but is not expected to increase further. The cost of capital has also declined, which is expected to be a long-term trend.
It is worth noting that in 2023, Ukrainian banks imported a record amount of foreign currency equivalent to USD 9.5 billion since 2014. For comparison, back in 2022, this figure was USD 5.9 billion.
