Page 49 - UKRRptOct22

Hryvnia retail deposits rose by 6.4% q/q and by 25.8% y/y. This growth was fuelled by demand deposits. Hryvnia term deposits decreased by 3% q/q. The growth in hryvnia retail deposits was driven by a 13.2% q/q increase generated by state-owned banks. The US dollar equivalent of FX retail deposits declined by 3.5% q/q.
Hryvnia corporate deposits increased by 4.3% q/q in Q2 for all groups of banks. Most of the rise in deposits occurred in early Q2, after which this trend stopped and was followed by a small decrease in June. The dollar equivalent of FX corporate deposits grew significantly in Q2, by 14.4% q/q, recovering to the level seen before russia launched the fullscale invasion. The overall level of dollarization did not change significantly in Q2. The share of FX corporate deposits expanded slightly, while that of FX retail deposits shrank.
During the war, Ukrainians increased their hryvnia bank deposits by a third. Since the beginning of the full-scale war, consumer hryvnia bank deposits have increased by 32%. As deputy head of the NBU Council, Vasyl Furman clarified that as of September 9, the funds of legal entities in the banking system increased by UAH 120B ($3.35B). Consumer hryvnia deposits increased by 32% compared to the beginning of the war. According to Furman, these are mainly short-term deposits and demand deposits. The increase in deposits shows that citizens of Ukraine trust the banking system.
Deposit rates in Ukraine have increased to 15-20%. Market rates have been affected by the NBU's June decision to increase the discount rate to 25%, and at some banks, deposit rates have reached 15-20%. The NBU also has noted an increase in the yields of hryvnia government bonds. According to the NBU, Ukraine government bonds with a maturity of one year or longer are being traded on the secondary market with a yield above 20%. At the same time, the regulator notes that despite the increase, the yield on deposits and military government bonds remains significantly lower than the level of current and expected inflation. As a result, bank deposit rates have only now compensated for the decline of the first months of the war and only slightly exceed the pre-war level. At the same time, low rates at primary auctions for placing hryvnia government bonds do not encourage banks to raise deposit rates.
49 UKRAINE Country Report October 2022 www.intellinews.com