The tightening of monetary policy and the consequent increase in interest rates were felt most by users of loans with variable interest rates, but at the same time interest on savings also increased. Domestic banks tell Biznis.rs that they have noticed an increase in citizens’ interest in savings products, and some of them have prepared special offers.
However, the competition in this field is quite strong, because those who have extra money can invest in government bonds or real estate in addition to savings.
According to data from the Statistical Report of the National Bank of Serbia for the year 2022, interest rates on received term deposits of households increased significantly from August to December. Thus, for example, interest rates on dinar deposits up to one year in August were at 2.28 percent, and in December they amounted to 3.35 percent, while for term deposits for more than two years at the end of 2022, they amounted to 3.94 percent.
For deposits indexed in euros, in August banks gave an average of 0.7 to 1.12 percent interest depending on the maturity, and in December they improved the offer to 1.48 to 1.56 percent.
At Erste Bank, where a special offer for term savings is in progress, they offer term savings in dinars, dollars and euros.
“As part of the special offer for term savings in dinars, funds can be termed for a period of three to 36 months with a nominal interest rate of 2.75 percent to 5.25 percent.” The special offer for dollars implies a term of 15 months and a nominal interest rate of four percent. When it comes to euros, in addition to the standard one, we also offer ‘active savings’, so for 15 or 25 month installments, with nominal interest rates of 2.5 or three percent, we also offer a premium of eight percent for a maturity of 15 months, or nine percent for maturity of 25 months on the calculated interest,” Erste Bank told Biznis.rs.
OTP Bank confirmed to Biznis.rs that citizens’ interest in saving in dinars, euros and dollars has increased in the last six months. That bank is running a campaign under the slogan “When you know what you’re saving for”, which was started last year in October.
NLB Komercijalna banka has a special offer for term savings in dinars, euros and dollars, and effective interest rates for term savings of over 500,000 dinars range from 4.1 percent to 5.1 percent, depending on the term period.
Bankers, however, point out that the overall situation with inflation and the measures taken by central banks to curb it do not suit all citizens when it comes to savings.
“High inflation does not favor savings in population groups that have lower incomes because it distorts their real incomes, which means they have less money left for savings.” On the other hand, the segment of the population that already has accumulated funds benefits from savings, because it correlates with higher interest rates, so the picture is polarized,” Miloš Zečević, director of the asset and liability management department at Erste Bank, points out for Biznis.rs.
Commenting on alternatives to savings in banks, such as investing in real estate, Zečević draws attention to the fact that the price of square footage is currently high.
“Perhaps it is more practical to go to the bank and get an interest rate that now goes up to three percent for a term of about two years, without any risk.” Also, in circumstances when inflation is high and political uncertainty is present, it is ungrateful to give estimates about whether citizens will opt for savings in euros or dinars, but we have seen, for example, that during the past year it was unjustified to “run away” from dinars into the euro, since all assumptions for exchange rate stability were met and we saw no risks on the horizon ,” says Zečević.
One of the traditional alternatives to savings is the purchase of government bonds, and Milan Marinković, a partner in WM Equity Partners, tells Biznis.rs that according to the yield criterion, there is no big difference between the two investments.
Both investments will bring you around 2.5 percent return in euros or around five percent in dinars . According to the risk criterion, there is also no dramatic difference – the risk of savings in domestic banks is very low for now, it can be said to be negligible. The same applies to the state, where we are witnessing the growth of the credit rating and the decline of credit risk,” said Marinković for Biznis.rs.
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