Fixed-term deposits: savings banks will raise funds from AFP and CTS at 7.5%

Fixed-term deposits: savings banks will raise funds from AFP and CTS at 7.5%

As in the six previous withdrawals, the country’s savings and credit banks are preparing to capture the resources from CTS and AFP withdrawals through more competitive rates than the banks for fixed-term deposits, but with a marked lag. due to the slowdown in inflation in 2024 and less restrictive policies of the BCRP.

The consensus is between 7% and 7.5%, compared to previous historical levels of 10% to 12% cwith a higher reference rate and much more auspicious for the profitability of clients and the savings banks themselves.

During the International Microfinance Seminar (SIM) 2024, held in Ica, the Peruvian Federation of Municipal Savings and Credit Banks (Fepcmac) pointed out that the release of pension funds will generate greater market liquidity and will favor, although in a “moderate” way, the behavior of the entities’ deposit rates, which for fixed-term deposits today average 6.5%.

Jorge Solís, president of Fepcmac, maintains that this scenario represents a higher funding cost for associates, with a clear impact on their results. It should be noted that today the rates for fixed-term deposits in banks are around 4% to 5.5%.

“In fact, the rate will be better than that of the banks, but, unlike previous withdrawals, the angular element is no longer available, which was a high reference price for the local market,” explains Solís.

When the market is flooded, financial institutions compete in short recruitment campaigns. However, if it is a savings bank with a strong component of deposits CTSit is not very encouraging to withdraw—as Congress promotes in a withdrawal that would see the green light in May—and then relocate under another financial product.

The central business manager of Caja Arequipa, Wilber Dongo, warns of a slowdown in the Peruvian system in recent months, but not only in loans, but also in financial spending which, due to last year’s reference rate (rose to 7. 25%), invited organizations to offer fixed-term offers with historical ratios.

“An offer that should not have been given at the time because today we are seeing that the profits of the vast majority have been impacted by financial expenses that increased substantially due to an increase in delinquencies,” acknowledges Dongo.

The fallacious optimism that Dongo refers to was for the financial system in general. Thus, The rating agency Moody’s has anticipated that financial margins will “take a while longer to recover their levels from two years ago.”, precisely due to a large offer of passive rates that increased financial expenses for entities, “but without increasing income, except for some banks in the corporate sector.” That is, in micro and small businesses, no specialized institution increased “even one percentage point of its credit rate.”

“Therefore, I receive the same income, but I pay more in passive interest rate. My margin was reduced, and if I also have a default that comes from covid or the emergency period of 2023, it stagnates. Half of the financial institutions, at least as of March, have shown profit losses,” says the specialist.

Greater pressure for anchoring the boxes

The savings banks no longer welcome the massive withdrawal of AFP or CTS funds, and even recommend only making the withdrawal to pay debts, but not to claim better financial products.

Rosa María Higa, central administration manager at Caja Ica, explains that, on the one hand, a worker who withdraws his CTS would be left without coverage while he reintegrates or starts his own business. But, on the other, “The market has changed in such a short time and we will not be able to offer rates like the ones we have been offering above 9%, but rather 6% or 7%.

“You also have the issue of placements that, in active rates for a municipal fund, are difficult to increase without the spread being reduced, which ends up affecting the profitability of the entities themselves,” Higa clarifies.

Normally, the longer the terms, the higher the interest rates for fixed-term deposits. However, the president of the Board of Directors of Caja Cusco, Raúl Velazco, explains that the previous situation reversed the rule because there was an expectation that the reference rate would return to its origins.

However, he assures that the savings banks’ offer “continues to be the most recommended”, since their rates are always competitive, and proof of their good risk management is that they closed 2023 with an average of 4.5% delinquency for their placements. In addition, the money committed to the new campaign will be covered by the Deposit Insurance Fund.

“The client is not only looking for high interest rates, but also solidity and solvency. Currently, the main savings banks have these high management indicators

and that is why we are a good alternative for saving clients,” Velazco highlighted.

Only withdraw if you are going to pay your debts

Approach. Jorge Luis Ojeda, UPC professor

One is free to make the decision to withdraw the funds AFP because he wants to have the tangibility of money. If taken, the first option I would give them is to put the money back into the AFPs themselves, which have a non-pension savings system. You deposit the money, earn the profitability that the investments in the entity earn and can withdraw the money whenever you like.

For the client, It is a way to invest in variable income depending on the fund you choose, since you have the freedom to remove or place resources. Then, the money continues to earn profitability and one has the possibility of withdrawing it whenever they want.

As for the CTS, if you take out the money and want to put it in a fixed term, orYou will get much lower rates than last year, and that will decrease over time; That is to say, now I can find them, but later they will go down again and therefore profitability will fall. Depending on the inflation trend and the reference rate, you could aspire to a good rate this year, but next year it will be more difficult and therefore will no longer have that attractiveness.

But it doesn’t make sense today to take out and put money in. On this occasion, the only thing the person will do is defund themselves for the future. If you need to pay off debts, it makes some sense, because the interest rate on debt is higher than a term deposit. But not even that, because I believe that we should pay the debts with what one can generate over time, especially young people, since with what they withdraw they could lose the possibility of earning in the next 30 or 40 years.

Reactions

Raúl Velazco, president of the Caja Cusco Board of Directors

“Last year was very complicated for the system as a whole. The recession led to a 0.5% decrease in GDP, and if the economy cools, financial services also contract.”

Rosa María Higa, central manager of Caja Ica Administration

“At Caja Ica, we will no longer be able to offer rates, as before, of 9%, and most likely they will be 6% or 7%. The withdrawal of CTS is not recommended today if it will be re-entered as another product.”

Wilber Dongo, central manager of Caja Arequipa Businesses

“Clients are going to take care of their funds as a form of savings, being cautious because the economic circumstances do not allow them to invest in Peru, there is still not the necessary confidence.”

Savings banks and AFP will raise pension funds

Congress’s pension reform proposal contemplates the entry of more actors into the system, such as banks, financial institutions and savings banks. In the opinion of various specialists, it is natural that the latter view the political proclivity to promote new withdrawals with less enthusiasm.

The Fepcmac emphasizes that the municipal funds are ready to receive AFP savers. He explains that only 20% of the EAP is on the payroll, while the other 80%, among which are many micro and small businesses, do not have that possibility. Precisely, that is their greatest advantage, because, unlike banks, “they do know that target audience.”

However, the federation is cautious about promoting the non-contributory pillar (Pensión 65, Contigo) of the reform, as it considers that it could set back the savings culture in the country.

larepublica.pe

Source: Larepublica

You may also like

Immediate Access Pro