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growth.
Tax Payment Influence
The significant movements in corporate funds were influenced by the timing of tax payments, with a substantial outflow in early May following the end of April's inflows. This dynamic reflects the cyclical nature of corporate financial activities aligned with tax obligations.
The overall growth in corporate funds over April and May highlights the underlying strength and liquidity within the corporate sector, despite short-term fluctuations due to tax payment schedules. This trend underscores the importance of analysing broader time frames to understand the true financial health of the corporate sector.
Russian Household Deposits Surge in May Amid Attractive Interest Rates
Household deposits in Russia increased significantly by 1.3 trillion rubles (+2.6%) in May, following a 2.1% rise in April, driven by attractive deposit interest rates. This growth is atypical for May, a month usually marked by slight increases or decreases in deposits due to pre-holiday spending and extended holidays. Year-to-date, household deposits have grown by 4 trillion rubles (+8.7%), nearly four times more than the same period last year (+1 trillion rubles, +2.8%).
Ruble and Foreign Currency Deposits
The primary growth in May was in ruble deposits, which increased by 1.246 trillion rubles (+2.8%), while foreign currency deposits remained almost unchanged, rising by 16 billion rubles in ruble equivalent (+0.4%).
Breakdown of Ruble Deposits
Ruble deposits grew both in current accounts (+658 billion rubles, +4.6%) and in term deposits (+588 billion rubles, +2.0%), with over 200 billion rubles attributed to monthly deposit interest income. The influx into term deposits was supported by favourable interest rates, which stood at 15.16% at the end of May, up from 14.92% at the end of April. The increase in rates is likely due to anticipated competition following the removal of transfer fees for moving funds between depositor's accounts (me2me) up to 30 million rubles per month.
Escrow Accounts
The growth in escrow account balances accelerated nearly threefold compared to April, reaching 353 billion rubles (+6.2% after +2.2% in April). This increase was primarily due to a reduction in the volume of property completions, leading to a decrease in escrow account releases (estimated to 137 billion rubles from 272 billion rubles in April), while mortgage issuance and housing sales
114 RUSSIA Country Report July 2024 www.intellinews.com