PrivatBank raised deposit rates to 13.5%

PrivatBank has revised rates on hryvnia deposits, and the yields on some accounts have risen immediately by 3.5 percentage points. Clients can now place funds at 13.5% per annum, while servicemen and veterans receive slightly more. It’s a noticeable increase, though not a record, as some banks are already offering 17% and above.

New terms at PrivatBank

The bank announced the changes on 13 October. The biggest increases were for six- and nine-month deposits: the rate on those rose from 10% to 13.5%. This concerns the “Standard” deposit without the right of early termination with monthly interest payments. The one-year deposit yields 13%, while the three-month one is significantly lower. So at PrivatBank it is more profitable to place money for six months than for a year.

For servicemen and veterans there are the programmes «Slava heroyam» and «Veteran» with a rate of 14% per annum. To receive that rate, you must meet the programme’s eligibility requirements.

Why banks are raising rates

Partly due to the National Bank of Ukraine (NBU). In September the regulator raised the key policy rate to 16%, and in October it remains at that level. More expensive money in the system usually pushes up deposit rates, although each bank decides for itself depending on how many resources it needs.

Another reason lies in people’s behaviour. As of the end of September term deposits made up only 32.7% of all household funds in banks, one of the lowest figures in history. At the same time the deposits themselves are increasing: their total reached a record 508.7 billion UAH, rising by 4.5 billion UAH over the month and by 38.6% over the year. However, money on cards and current accounts is accumulating even faster. During the war people want to be able to withdraw or transfer funds at any time, and not everyone is prepared to lock away savings for a few extra percentage points.

Who else has raised rates

In the past two weeks deposits have become more expensive at several other banks:

• KominBank offers 17% for a one-year deposit (plus 1.8 p.p.), 16.75% for nine months, 16.5% for six months and 16% for three months;
• MTB Bank raised the six-month rate to 17%, gives 16.45% for nine months and 16.3% for a year;
• Bank Pivdennyi added 0.5 p.p., so now it is 15.25% for three months, 15.5% for six months and 15.75% for a year;
• abank offers 15.6% for a three-month deposit.

As of 21 October the record-holder is Akordbank: 17.17% for three months and 17% for a year. «Kredit Dnipro» offers 17% for any term from three months to a year, FUIB 17% for six months, Tascombank up to 16.5%. However, the highest rates often come with conditions: only for online deposits, only for new clients, or without the right of early withdrawal.

How much a depositor will actually earn

Take 100,000 UAH for six months at 13.5% at PrivatBank. Accrued interest will be about 6,750 UAH. From that amount the state will take 18% personal income tax (PIT) and a 5% military levy, leaving roughly 5,198 UAH net. At 17% in another bank the gross income would be noticeably higher, but the taxes are the same.

Also bear in mind that the rate is quoted annually. 17% for a three-month deposit means roughly a quarter of that rate over three months, not the full 17% for the period. In addition, inflation erodes returns. And after the term ends the bank may automatically renew the contract at a new, possibly lower, rate.

Regarding protection, during martial law and for three months after it the Deposit Guarantee Fund returns deposits of individuals in full, both in hryvnia and in foreign currency. After that the guaranteed amount will be at least 600,000 UAH per depositor in one bank.