Shrinking incomes will heat up interest of Belarusians in bank deposits

In Q1 2015, people’s incomes reduced by 4.2% compared with Q1 2014. The main culprits were high inflation rate and the decline in employment in the economy. Bank deposits have remained one of the few available ways to receive additional income for the population. People’s confidence in the banking system has somewhat strengthened due to payments to depositors of Delta Bank, which went bankrupt. Interestingly, even though interest rates on deposits have reduced, the banking system is anticipating an increase in foreign currency and rouble deposits, reduced interest in consumer loans, as well as increased share of problem loans in the banks’ portfolio. Foreign currency deposits will increase due to savings made outside the banking system. In addition, retail trade turnover might reduce due to lower consumer spending.