VTB: A reduction in the key rate will boost retail lending

      The Central Bank of Russia is consistently implementing a strategy of easing monetary policy, reducing the key rate by 2%. VTB analysts believe that this decision will have a positive impact on retail lending, particularly in the mortgage segment. Simultaneously with the decrease in the key rate, interest rates on deposits are showing a downward trend but still remain of interest to depositors seeking to lock in profits until the end of the current year. The reduction of the key rate has prompted banks to gradually lower yields on deposits and savings accounts. In the first half of July, the maximum interest rate in major lending institutions fell below 18%. The rate of decline in deposit rates is outpacing the reduction in the key rate, indicating a likelihood of maintaining this trend until the end of the year. Financial institutions are adjusting their plans, emphasizing prompt capital attraction. It is noted that interest rates on semi-annual deposits are decreasing, while those on three-month deposits are increasing. For example, VTB has developed adaptive conditions for depositors, adding new periods for placing funds – 2 and 4 months. Despite the decrease in interest rates, deposit and savings accounts continue to be in demand among citizens as means of capital preservation. It is forecasted that in the second half of the year, the savings sector will continue to expand, but at a less intense growth rate than previously expected. According to VTB’s forecast, by the end of 2025, total savings will grow to 67 trillion rubles, with about 63.5 trillion rubles in ruble deposits. Following the regulator’s decision, VTB has revised its forecast for mortgage lending upward to 4.04 trillion rubles, compared to the previous estimate of 3.8 trillion rubles. There is also an expected increase in consumer credit issuance: the new forecast is 3.5 trillion rubles versus the previous 3.2 trillion rubles. At the same time, the impact on the auto lending market will be minimal. Most market players have already adjusted their tariff policies considering the current rate reductions, and further development of this segment depends on the cost of vehicles and the level of population indebtedness. The forecast for auto loan issuance in 2025 remains unchanged at 1.3 trillion rubles. State support programs, which significantly influence issuance volumes, will continue to play a key role until the end of the year. Banks have begun to adjust interest rates; in particular, VTB has already decided to cut rates on consumer loans by 2%. Future actions will depend on the regulator’s stance and market developments.