As expected, latest BoG data show that deposits [private sector] rebounded 2.2% m-o-m in July with inflows reaching €3.05bn, following the formation of the new coalition government in the second half of June. It is reminded that outflows peaked to €6.7bn in June and (a historic high) €9.2bn in May, on heightened sovereign risk due to the political uncertainty during the elections period (i.e. post May 6 and ahead of June 17 elections). July additions are fully attributed to time additions of €3.3bn, while savings flow remained negative for third consecutive month at €0.5bn. Furthermore, y-t-d outflows amount to €21.1bn on time and savings deductions of €10.2bn and €7.4bn respectively.

More specifically, time deposits rose 4.0% m-o-m and slipped 15.8% y-o-y to €91.5bn. Monthly flow turned positive with inflows of €3.3bn in July from extended outflows of €4.1bn in June and €7.6bn in May. Savings retreated 0.9% m-o-m and 21.2% y-o-y to €46.1bn. Monthly flow remained on negative grounds with outflows reaching €0.5bn in July from €1.9bn in June and €1.0bn in May. Sight deposits increased 1.2% m-o-m and contracted 18.9% y-o-y to €16.2bn. Monthly flow was marginally positive with inflows of €0.2bn from outflows of €0.7bn in June and €0.6bn in May.

It is also noteworthy that total deposits [euro and non-euro area residents] rose by €3.8bn or 2.2% m-o-m to €180.1bn, also reflecting non-euro area residents’ inflows of €0.4bn, following the significant outflows of €8.3bn in June and €9.1bn in May.

Following the rebound in July, I retain my view that although the outlook is less fragile, compared to that prevailing in May and June, upcoming political and macro developments in September and October will drive deposit evolution in the coming months.