According to data from the Croatian National Bank (HNB), total deposits in commercial banks amounted to 263.9 billion kuna at the end of July, representing growth on a monthly and annual basis, as stated in the analysis by Raiffeisenbank Austria (RBA).
Total deposits of commercial banks, which include deposit money as well as savings and term deposits, were 1 percent or 3.8 billion kuna higher in July compared to the previous month, while on an annual basis, they increased by 1.5 percent.
– Observing changes on an annual basis, there has been a slowdown in growth, primarily due to a decrease in savings and term deposits, especially foreign currency deposits, the RBA analysis states.
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Namely, deposit money, which amounted to nearly 67 billion kuna at the end of July, continued to show solid growth both monthly and annually. With a monthly increase of 2.8 billion kuna, the monthly growth rate was at 4.4 percent.
When viewed by sectors, the majority of the increase comes from non-financial enterprises, and the trend of high growth rates of deposit money, almost entirely double-digit, has been ongoing since March 2013.
In July, the annual growth rate of deposit money was 20.7 percent, making this category of deposits 11.5 billion kuna higher compared to the end of July 2016. Thus, the share of deposit money reached 25 percent, levels last recorded more than twenty years ago, emphasize RBA analysts.
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They note that the growth of deposit money, besides the recovery of the economy, is a result of the domestic sectors’ preference for holding more liquid financial assets in conditions of continuously declining interest rates on savings and term deposits.
On the other hand, the decline in interest rates on deposits is a direct consequence of exceptionally high long-term liquidity, which also causes a drop in interest rates on placements. These are not only characteristics of the Croatian financial market but also reflect the global environment, they explain at RBA.
They add that after a strong monthly reduction in savings and term deposits, predominantly led by a decrease in the category of foreign currency deposits, was halted in June after five months, a decline of 0.1 percent was again recorded in July, bringing total savings and term deposits back to a level of 196.9 billion kuna.
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Furthermore, for the tenth consecutive month, total savings and term deposits recorded an annual decline in value of 3.7 percent. This decline is further contributed to by the strengthening of the kuna against the euro – by 1.12 percent at the end of July 2017 compared to the end of July 2016 – as foreign currency deposits, mainly in euros, continue to dominate the structure of these deposits, RBA notes.
These deposits amounted to 162.3 billion kuna at the end of July, of which 134.4 billion kuna related to the household sector.
Kuna savings and term deposits, with a total value of 34.6 billion kuna, recorded significantly modest changes, a decline of 0.5 percent on a monthly basis and 3.8 percent on an annual basis.
