BoG data show that deposits [private sector] substantially dropped 4.4% m-o-m and 20.0% y-o-y to €150.6bn in June from €157.4bn in May. Deposit outflows continued unabated at €6.7bn, after reaching a new historic high of €9.2bn in May, on heightened sovereign risk due to the political uncertainty ahead of June 17 elections.

Reportedly, the negative trend that prevailed in the first half of June, was reversed in the second half (i.e. post elections) with inflows <€3bn, implying that withdrawals recorded in the first half of June probably exceeded May outflows. It is noteworthy that June outflows are primarily attributed to household deductions of €5.7bn. Furthermore, y-t-d outflows amount to €24.1bn, on time and savings deductions of €13.5bn and €6.9bn respectively. My calculations show that the bulk of y-t-d outflows (€18-20bn) was recorded in May and the first half of June, i.e. in the period between the two general elections.

More specifically, time deposits slipped 4.6% m-o-m and 18.2% y-o-y to €88.0bn. Monthly outflows remained at high levels at €4.1bn in June from €7.6bn in May. Savings retreated 4.0% m-o-m and 21.7% y-o-y to €46.5bn. Monthly flow remained negative with outflows increasing to €1.9bn in June from €1.0bn in May. Sight deposits slipped 4.2% m-o-m and 24.2% y-o-y to €16.0bn. Monthly outflows remained almost flat m-o-m at €0.68bn.

Total deposits [euro and non-euro area residents] retreated by €8.3bn or 4.5% m-o-m, also reflecting general government and non-euro area residents’ outflows of €0.9bn and €0.6bn respectively.

Reportedly, the positive trend post June 17 elections is also evident in July with total inflows seen at c€10bn over the past six weeks. Same press sources note that there is high interest for time deposits with a maturity of 6-12 months, which suffered huge outflows in the previous period. In my view, although the outlook is less fragile, compared to that prevailing in May and June, upcoming political and macro developments will drive deposit evolution in the coming months.