Rates on deposits in Ukraine will remain at current level in next few quarters, experts say

Kyiv, May 13 (Interfax-Ukraine) - Interest rates on deposits in Ukraine will remain at the current level in the next few quarters, experts of the Forum for Leading International Financial Institutions consider.

"This year the pace of growth [of deposits] will slow down, but will still exceed the pace of crediting growth. Interest rates on deposits are likely to remain at the current level in the next few quarters," according to a forum review represented to journalists at a press conference at Interfax-Ukraine on Thursday.

According to the organization, the largest banks pay an average of 13% on annual fixed-term deposits in the hryvnia and around 7% on deposits in U.S. dollars.

Further reduction in deposit rates will be constrained by some reduction in liquidity as a result of gradual recovery of lending. At the same time, the forecast acceleration of inflation will generate pressure towards increasing rates on deposits.

"The pace of crediting growth is lagging behind the pace of deposit growth, therefore rates [on deposits] are falling. But no further reduction is expected because inflation is approaching a double figure. Therefore the rates will remain at the current level," the head of the strategy department at OTP Bank, Yevhen Zinovyev, explained.