bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Friday 19.01.2018 | Name days: Alnis, Andulis
LatviaLatvia

Deposit yield four times lower in year and a half time

FaceBook
Twitter
Draugiem
print
(No Ratings Yet)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RU

Within year and a half, deposit yield at the Latvian banks has overall dropped 3.5 to four times, but in the last six months – almost two times. While the interest rates of 12-month deposits in lats currently form only 3.5%, after accounting for 5.5% to 6% last November, according to the portal Gudriem.lv data.

The deposit yield decline has contributed to the emergence of new trends. If during the period 2009 – 2010 Latvia’s population preferred short-term deposits, this spring long-term deposits ranging from one year or longer prevail.

Swedbank’s Investment Product Department manager Reinis Jansons explains such a dramatic deposit interest rate drop urges depositors to assess term deposits thoroughly and choose deposits with the most beneficial conditions and highest interest rates. For example, in early 2010, when deposits with increased interest rates accounted for 37% of all Latvian household deposits, in late 2010 they had already increased to 45%. People are mostly keeping their money in bank accounts. They are waiting for deposit rate growth to place their spare funds on more favourable interest rates, Swedbank’s expert indicates.

According to Citadele Bank experts, even two years ago, people in Latvia preferred placing their funds on short-term deposits for the period of one to three months. Currently, 6 to 12-month deposits are the most requested. Such depositors choice can be explained with the fact that deposit rates are falling all the time – for the short-term deposits they have dropped almost to zero, hence they have become less attractive for depositors. Our estimates indicate over the last year the return on 3-month deposits in lats has fallen by 95%, on deposits in dollars – by 68%, while on deposits in euro – by 65%, the bank’s representatives specify.

The second trend mentioned by the banking experts is the so-called structured deposits’ increasing popularity. Their yield is determined by various financial assets; so, as a rule, the profit from such deposits is higher than of ordinary deposits.

Despite the term deposits are still the most popular, constituting 48% of all the bank’s deposits, the Progressive deposit popularity keeps growing, SEB bank’s spokeswoman Ieva Tetere characterizes the current situation in the deposit market. Presently, more than 25% of SEB bank’s traditional and progressive term deposit contracts are concluded via the Internet bank.

When analyzing the Progressive deposit offers in 2010, more deals relating to raw materials and precious metals were required. Based on the amount of deposited funds and the client’s applications, last year the most demanded offer was the Progressive deposit Gold. While in terms of yield, the best indicators were observed for the offer Raw Materials and Metals deposit – its underlying asset return on February 1, 2011, comprised about 43%.

As regards deposit rates, all the surveyed banking experts by the portal Gudriem.lv indicate significant changes are not expected in the next six months. The reason – the lat currency balance, which is practically not used in lending. While the return on term deposits in euro might slightly increase in the next six months due to the ever-increasing inflation rate in the euro zone.

Gudriem.lv found that currently high interest rates on term deposits are offered by small banks, such as the Regional Investment Bank, SMP Bank, PrivatBank and Trasta komercbanka. The current best offer yield on 1 000 lats deposit for 12 months constituates 3.05 – 3.5% per year. The yield on such large deposit in euro and US dollars for the same period is similar: for euro deposits – 3.5% to 3.65% per year, while for US dollar deposits – 3% to 3.4% per year.

Another trend indicated by the surveyed banking experts – the average depositers’ age is increasing. For example, SEB bank’s representatives have observed that the most active «investors» are elderly people – 55% of the bank’s total volume of term deposits have been deposited by clients, aged 50 to 74 years.

While the deposits of Citadele’s clients, in the age group 60 to 70 years, comprise 24% of the bank’s total deposits. At the same time, Citadele ranks first in terms of deposit volume, particularly, its clients, in the age group 50 – 60 years, with deposits comprising one-fourth of the total deposits.

Interestingly, banks also have quite «exotic» investors. SEB bank has clients who are only few years old. Their relatives accumulate savings on their name at the Maturity deposit. Moreover, there are also about thousand solid pensioners, aged 80 years and more among the bank’s clients, reveals Ieva Tetere.


Leave a reply

  1. Clara says:

    How it is possible to save when we have no money to feed kids?

    Thumb up 0 Thumb down 0

Weather to remain winter-like in Latvia during the weekend and next week

On Friday and Saturday, no major increase of snow is expected. Air temperature will increase slightly, but colder masses of air will slow into the country on Sunday, as reported by Latvian State Environment, Geology and Meteorology Centre.

Winter storm in Netherlands and Germany turns tragic

A powerful winter storm in western and central Europe has claimed the lives of eight people.

Lithuanian bishops: skipping fasting on February 16 this year is not a sin

In an unprecedented move, the Conference of Lithuanian Bishops, the governing body of the Lithuanian Catholic Church, said that meat dishes okay for the people of faith on February 16, which marks the 100-year anniversary of Lithuania's statehood and the Lent Friday, which is traditionally a day of fasting for religious Catholic people.

Coincidence? Votes from Harmony and UGF ensure Sudraba remains the head of Oligarchs case committee

On Thursday, 18 January, the majority of Saeima members voted against the proposal to dismiss Inguna Sudraba from the post of the head of parliamentary investigative committee in charge of the review of the infamous Oligarchs case.

Kaljulaid criticised over involvement of acclaimed, but unrestrained director in centennial reception

As Estonia readies for the presidential reception to honour the 100th anniversary of Estonia, its President Kersti Kaljulaid is being criticised in an open letter for trusting Tallinn’s NO99 theatre, whose director physically assaulted a female colleague.

22.1% of Latvia’s residents subjected to risk of poverty

In 2017, 425 thousand persons or 22.1 % of Latvia population were at risk of poverty in 2016 – 0.3 percentage points less than in 2015. Equivalent income of this part of the population were below 330 euros monthly.

LAAC: Latvia’s milk market can be sorted out by joining forces in exports

Latvian Association of Agricultural Cooperatives (LAAC) has received support and praise for the public discussion regarding rapid milk procurement price changes, which is something that has recently affected the majority of agricultural cooperatives. This has helped cooperatives band together in order to sort out the milk market. This idea came from the example set by grain producer cooperatives, which did the same thing fifteen years ago, as reported by the association’s representatives.

Forevers announces its decision to exit from Latvian Federation of Food Companies

Forevers meat processing company has decided to exit from Latvian Federation of Food Companies (LFFC). The contract between two parties will be terminated in January.

Saeima’s Oligarchs case investigative committee hastily approves final report

In spite of objections, grammatical errors, criticisms about lacking effort, as well as Inguna Sudraba’s unfit status to lead the committee, members decided to move the meeting from 11:00 to 08:00 and approve the final report in a rushed vote.

Removal of 1 and 2 euro cent coins from circulation suggested by Bank of Estonia

Estonian central bank is willing to follow the eurozone trend of limiting the circulation of euro 1-cent and 2-cent coins and in time to remove them entirely from circulation in the Baltic country.

Cert.lv: attacks on e-health system and LETA were likely ordered

Attacks on e-health system and LETA agency were likely ordered, said Cert.lv deputy manager Varis Teivāns in an interview to Rīta Panorāma programme of LTV.

As Catalan parliament reconvenes, it elects pro-independence speaker

The Catalan regional parliament has in its first sitting since its ousting and snap December election elected a separatist-minded politician as its Chairman, which indicates that the attempts to break the region away from Spain would continue.

Latvia’s National Armed forces receive new Harris tactical radio equipment

In 2017, Latvia received tactical military radios worth USD 10.5 million from American Harris Corporation. Procurement of radio equipment will further improve command function and help develop a lasting communication system with other NATO member states, as reported by Latvian Defence Ministry.

MEP: Europe continues strengthening its energy independence

«The European Parliament has voiced strong support towards Europe’s energy independence and moving its energy policy away from Russia’s monopoly by investing in energy efficiency and renewable energy resources,» said MEP Krišjānis Kariņš after the vote on Clean Energy Act’s first reading in Strasbourg.

Apple expected to pay additional 38 billion USD in taxes for money kept abroad

Motivated by the U.S. tax reform, Apple will pay about 38 billion U.S. dollars (31 billion euros) in tax on the roughly 250 billion dollars (204 billion euros) the computer technology firm keeps outside of its country of origin as it plans to focus more on its contribution to the American economy.

Latvian police commenced three criminal processes for contraband of drugs this year

In the first two weeks of 2018, State Revenue Service’s Customs Police commenced three criminal processes in regards to illegal drugs contraband in postal packages from Lithuania to Latvia.

Betsafe: To Latvia from the Heart has laughable chance of entering next Saeima

With declining ratings, Inguna Sudraba’s party To Latvia from The Heart has been left with laughable chances of entering the next Saeima, Betsafe bookmakers say.

EU Affairs Committee: EU Digital Single Market motivated Latvia to perform reforms

European Union’s Digital Single Market strategy offered new opportunities for Latvian businessmen to actively present their services in other member states. The strategy also served as an impulse for the business environment and state administration. The strategy motivates our government to walk the road of reformation more actively and clean up messes that have remained for a long time, said chairperson of Saeima’s European Affairs Committee Lolita Čigāne on Wednesday, 17 January.

Expert: Zhdanok’s decision to leave EP was carefully calculated to revive Latvian Russians Union

The decision made by member of the European Parliament (EP) and leader of Latvian Russians Union (LRU) Tatyana Zhdanok, in accordance with which she intends to leave the European Parliament to instead focus on LRU’s election campaign, was a carefully calculated step to reanimate the party, said dean of Social Sciences Faculty of the University of Latvia Juris Rozenvalds.

Maxima Latvia expects price decline up to 15% in 2018

Following Maxima Latvija’s decision to reduce prices for nearly 1,000 important goods, it is expected that a similar step will be made by other players in the industry. This could mean prices for everyday goods could decline by up to 15%, as BNN was informed by the company.

Latvia’s economy reaches highest peak since 2015

Residents’ mood has improved for most positions of the study. Residents were positive the most about ongoing changes for Latvia’s economy, the value of which has reached its peak since July 2015. In spite of optimistic changes, however, 30% of respondents are critical about ongoing economic changes in Latvia, according to results of the latest Baltic International Bank’s Latvian Barometer.

Riga exchange hopes for new securities issuers this year

There are hopes to see new Latvian businesses release shares on the stock market this year, says chairperson of Nasdaq Riga Daiga Auziņa-Melalksne.

Latvian universities to offer students an innovative grant system

To help develop students’ innovative and business abilities, Latvian Education and Science Ministry has developed a new student grant system, which will focus mainly on supporting innovative projects and research and further improve cooperation between universities and leading businesses to attract human resources, the ministry reports.

Russian sociologists fear closure, quit publishing election polls

Russian leading independent polling organisation Levada Center has stated it has quit releasing results of polls on the country’s spring presidential election citing concern that the authorities could close it down for what they see as meddling in politics.

Court maintains pledge on former LAR leader’s bank accounts and owned property

Court has applied pledge status on property and bank accounts owned by Riga City Council member Mārtiņš Bondars to enforce EUR 15 million from him as part of Latvijas Krajbanka criminal case, as reported by TV3 News.

Would you be ready to boycott something in your life?

View Results

Loading ... Loading ...

Polls Archive



Category feed: Feed: