Household deposits increased amid precision

By Leonidas Stergiou

The March data hid a surprise for those expecting a reduction in household deposits, due to increased liabilities and accuracy. However, the official data of the Bank of Greece show that households, after two negative months (January and February), increased their savings by 200 million euros in March. And the temporary data of the banks show that April will probably end positively as well.

However, this statistical result is mainly due to technical reasons, as well as the large decrease in corporate deposits, mainly in the insurance sector. According to bank executives, the net positive flow of deposits in household accounts by 200 million euros is marginal and is due to the following reasons:

First, From the end of February to the end of March, there were outflows of funds from liquidation of mutual funds over 100 million euros. That is, two-thirds of the funds invested in mutual funds in January were liquidated. The liquidations of the shares were credited to deposit accounts.

Secondly, There were liquidations from other investment products due to the uncertainty brought by the war.

Thirdly, The credits and charges that affect each month’s account balances also depend on the closing day of each month. For example, the last day of March (31/3) was Thursday, when, for example, many payrolls are credited. It has been observed that when the closing of the month falls near a holiday or weekend there is no strong disbursement on the same day for purchases, payments and money transfers, but from the following days. Therefore, outflows are accounted for in the following month.

Fourth, The marginal net increase of EUR 200 million was also a result of the restraint of consumption due to accuracy and payment of high energy bills.

Fifth, the outflow was partially restrained by the state subsidies for electricity.

April onwards

April moved positively, despite the return on mutual funds of almost 107 million euros. Provisional figures suggest it will close near March levels, as it was favored by the Easter gift. According to the same executives, even lower savings rates are expected in the coming months and will probably be combined with net outflows, due to revaluations and tax payments. Tourism will contribute positively to the deposits of businesses (and some households) in the summer.

Comparison with 2020 and 2021

However, in any case, the vertical de-escalation of the savings flow from households and businesses shows on the one hand the withdrawal of the previous support measures and on the other hand the high payments due to obligations (taxes, contributions, installments) and accuracy.

For example, in March 2020, net household savings were € 1.3 billion and in March 2021 it was € 792 billion. That is four to six times higher than in March 2022. Also, the net savings of households in the first quarter of 2020 was 1.9 billion euros, in the first quarter of 2021 it was 1.3 billion euros, while in the first three months of the year there was a net outflow of 1 billion euros (almost half due in January).

Businesses

In terms of the business sector, significant outflows were observed in March, which, according to bank executives:

* In insurance companies, the net outflow of € 700 million is due to technical reasons. Every quarter, insurance companies transfer their deposits to other forms of investment, such as interest, bonds or other cash management investments. Therefore, this money will appear in the coming months. Indeed, every quarter there is a large decrease in the deposits of insurance companies.

* In the rest of the non-financial companies, the net outflow of 475 million euros, combined with the increase of their loans in March by 754 million euros (and over 1 billion in the two months February – March), is related to the preparation in view of the summer season, the purchase of stocks and the payment of increased invoices due to accuracy.