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Yield on Russian ruble deposits for legal entities was the highest in 2016

Analytics and Opinions
17:51 | 24.01.2017 | Business-News

BUSINESS NEWS continues to assess the yield on short-term deposits for the legal entities in different currencies.

 

As before, the estimated deposit amounted to BYN 100 thousand. Free cash could be placed on the savings deposit in Belarusian rubles or converted into US dollars, euros, or Russian rubles. When calculating the deposit amounts, the highest published interest rates on the deposits for new clients of the commercial banks were used. It should not be ruled out that the deposit rate could be changed when coordinating the individual conditions of depositing at the commercial bank. Four kinds of deposits (one-month, three-month, six-month, and one-year) were considered in this post-event analysis.

 

The highest deposit rates for the legal entities used in the market as of the reporting dates

 

 

As of 23.01.2016

As of 23.07.2016

As of 23.10.2016

As of 23.12.2016

for one-year deposit

for six-month deposit

for three-month deposit

for one-month deposit

BYR

30.0%

20.0%

16.1%

13.8%

USD/EUR

6.0%

5.0%

5.0%

4.0%

RUB

11.0%

13.0%

13.0%

10.0%

 

When calculating the deposit yield, the depositor's losses from the conversion of cash assets from the national currency into the foreign one and vice versa were taken into account. These losses were 0.5% of the deposit amount per each conversion. The profit tax from interest income on the legal entities' deposit amounting to 18% of the accrued funds was taken into account, too. Then the total in foreign exchange was converted into Belarusian rubles, and the yield was calculated based on this sum.

One-yeardeposits

 

On January 23, 2016, the potential depositor could deposit cash assets in either Belarusian rubles or foreign exchange at the commercial bank. When the cash assets were converted from Belarusian rubles into US dollars, euros, or Russian rubles at the exchange rate of the National Bank as of the current date, the legal entity had USD 47,167.6, EUR 43,623.1, or RUB 3,797,709.9 taking into account the conversion losses.

 

After a year, the Russian ruble deposit proved to be the most profitable. Over the year, the interest income totaled BYN 38.2 thousand. However, the interest amount after profit tax and conversion losses decreased to BYN 34.8 thousand. Therefore, the deposit yield equaled to 34.8% after a year. The Russian ruble deposit yield grew because the exchange rate of Russian ruble against Belarusian ruble had been increasing in the course of 2016. According to the data of the National Bank, Russian ruble got up against Belarusian ruble by 23.8% from January 23, 2016 to January 23, 2017.

 

The Belarusian ruble deposit took the second place by the yield after a year. In contrast to the foreign exchange deposits, the Belarusian ruble deposit was the only one that was not under the influence of the currency fluctuations. As a result, the holders of the Belarusian ruble deposit could receive BYN 30.0 thousand worth of interest income. Their interest income after profit tax amounted to BYN 24.6 thousand.

 

The holders of the US dollar and euro deposits sustained losses after a year. The loss after profit tax and conversion bank commission of the holders of the US dollar deposits was BYN 3.5 thousand, euro deposits – BYN 4.6 thousand. The exchange rate of Belarusian ruble strengthened against euro and dollar in 2016, which led to these losses. Over a year, Belarusian ruble strengthened against euro by 9.2%, against dollar – by 8.2%.

Six-month deposits

 

All four six-month deposits demonstrated the positive yield. After six months, the Russian ruble deposit had the highest interest amount. The income amounted to BYN 12.7 thousand over this period. However, the interest amount after bank commission and profit tax decreased to BYN 10.9 thousand.

 

The Belarusian ruble deposit took the second place by the yield. Over six months, the investment in this deposit amounted to BYN 10.1 thousand. It totaled BYN 8.3 thousand when all payments were made.

 

The holders of the US dollars and euro deposits made a profit, too. The exchange rate of Belarusian ruble slightly weakened against these foreign exchanges in the latter half of the year. Therefore, after six months, the interest income of the holders of the US dollar deposits was equal to BYN 1.7 thousand. Their interest income after profit tax and bank commission totaled BYN 0.8 thousand. The interest income of the euro deposit proved to be even more. After six months, the euro deposit holders received BYN 3.7 thousand. The interest income after profit tax and bank commission equaled to BYN 2.7 thousand.

Three-month deposits

 

After three months, the Russian ruble deposit demonstrated the highest yield. Over three months, the interest income totaled BYN 9.2 thousand. When the profit tax and bank commission were paid, the holders received just BYN 8.0 thousand. The yield grew because the exchange rate of Belarusian ruble lost value against Russian ruble.

 

The Belarusian ruble deposit took the second place by the yield after three months. The interest amount was BYN 4.1 thousand after three months. The income after profit tax decreased to BYN 3.3 thousand.

 

The US dollar deposit also demonstrated the positive yield after three months. Over three months, the interest amount was BYN 2.4 thousand. When the profit tax and bank commission were paid, the holders received BYN 1.7 thousand.

 

Only euro deposit had the negative yield after three months. The deposit rate was not enough to cover the conversion losses and profit tax payment. Therefore, the income was BYN 0.5 thousand before the deduction of all required costs. When all costs were paid, the loss equaled to BYN 0.3 thousand.

One-month deposits

 

After a month, the Russian ruble, Belarusian ruble, and euro deposits demonstrated the positive yield. Only yield on the US dollar deposits was negative.

 

The Russian ruble deposit yield slightly exceeded the yield on the Belarusian ruble deposit. It is explained by the fact that the Belarusian ruble deposit did not have any conversion losses. Therefore, the interest of the Russian ruble deposit was BYN 1.6 thousand. When all required costs were paid, the profit decreased to BYN 0.97 thousand. The interest income of the Belarusian ruble deposit totaled BYN 1.2 thousand. When the profit tax was paid, it made up BYN 0.96 thousand.

 

The euro deposit took the third place among the one-month deposits. Over a month, the interest equaled to BYN 1.6 thousand. The interest after bank commission and profit tax decreased to BYN 1.0 thousand.

 

The interest income on the US dollar deposit proved to be negative because the Belarusian ruble exchange rate strengthened. The losses amounted to BYN 1.4 thousand.

Therefore, the yield on the Russian ruble deposits was the highest because the exchange rate of Belarusian ruble weakened against Russian ruble in 2016. The yield on the currency deposits will depend on the volatility of Belarusian ruble against foreign exchange in 2017. Besides, the National Bank makes efforts to make the currency deposits less attractive putting pressure on the interest rates and changing the reserve requirements for the commercial banks. Thus, it becomes less profitable to attract the currency resources.

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