We Learn Whether Other Banks Will Follow HPB’s Example in Raising Deposit Rates

Croatian Postal Bank (HPB) last week announced a significant increase in interest rates on savings, introducing a new savings product that allows clients to achieve a return of up to three percent.

– By simply contracting ‘HPB super savings’ through the most accessible sales network in Croatia, that is, at any of the 69 Bank centers starting from October 2, 2023, or subsequently through a thousand post offices during October, clients can enhance their funds through market interest rates ranging from 2.80 percent for a six-month term, 2.90 percent for a nine-month term, or 3.00 percent for a twelve-month term. The introduction of such a product will contribute to curbing inflation through the passive management of term deposits, while on the other hand, it will enable savers to achieve an attractive return that mitigates the negative effects of inflation on the value of money – stated HPB.

Following this news, the question arises whether other major banks operating in Croatia will follow HPB’s path, that is, whether there will be a drastic increase in deposit rates. Here’s what five major banks say.

– Erste Bank has increased interest rates on newly contracted deposits for citizens in euros and dollars by an average of one percentage point since May 1 of this year. Depending on the model and term of savings, the new interest rates range from 0.3 percent to 1.5 percent, compared to 0.02 percent to 0.1 percent, which they were before May 1. The new interest rates also apply to existing term deposits from the date of the next automatic prolongation, if the same was contracted – they tell us from Erste Bank.

Although it was the first bank on the market to raise interest rates on citizens’ deposits in May this year after a long period, Erste Bank states that it continues to monitor market developments and, in accordance with announcements following last week’s meeting of the Government and bank representatives, is intensively conducting analyses aimed at further changes in this segment.

Privredna Banka Zagreb also states that they started raising interest rates in deposit operations with citizens last spring, while a second round of interest rate increases was made recently in August, with interest rates on savings in euros, depending on the term and type of savings product, going up to, for example, 1.50 percent for a six-month term or 1.70 percent for a one-year term.

– We closely monitor further market movements and adjust our product and service offerings accordingly – they say at PBZ.

OTP Bank also stated that they are intensively working on analyzing all options and will announce at the beginning of October the date of application of new, higher interest rates.

Zagrebačka Bank is working on gradually increasing interest rates on citizens’ deposits in the upcoming period.

– We want to emphasize that clients will be informed about changes in interest rates on term deposits in the offer of Zagrebačka Bank before their actual implementation – they briefly stated.

Finally, Addiko Bank also announced.

– Despite the fastest growth of interest rates in the history of the euro area, the effects of introducing the euro, such as the release of new liquidity, reduced regulatory costs, and country risk in Croatia, have led to interest rates on both loans and deposits rising significantly more gently compared to other countries. Addiko Bank began raising interest rates on deposits at the beginning of July and today offers one percent interest for a twelve-month term – they also told us, emphasizing that they continuously monitor market conditions and will timely inform clients about further increases in deposit rates and to what extent.

Finance Minister Marko Primorac stated last week that we can certainly expect an increase in deposit rates, as he said,’certainly over two percent, and maybe even three.’