Deposit flow reversed in August with slight outflows of €0.24bn

According to latest BoG data, deposit [private sector] flow reversed again in August with slight outflows of €0.24bn following inflows of €3.0bn in July.  It is reminded that outflows had 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). August deductions are fully attributed to sight and savings outflows of €0.7bn and €0.5bn respectively, while time flow remained positive for second consecutive month at €1.0bn. Furthermore, y-t-d outflows amount to €21.3bn, on time and savings deductions of €9.2bn and €7.9bn respectively.

More specifically, time deposits rose 0.8% m-o-m and slipped 16.0% y-o-y to €92.3bn. Monthly flow remained positive with inflows of €1.0bn in August from €3.3bn in July. Savings retreated 1.3% m-o-m and 22.1% y-o-y to €45.5bn. Monthly flow remained on negative grounds for fourth month in a row at €0.5bn, reflecting lower household disposable income and payment of personal income tax in August. Sight deposits contracted 4.2% m-o-m and 23.4% y-o-y to €15.5bn. Monthly flow turned negative with outflows of €0.7bn from marginal additions of €0.2bn in July.

Overall, deposits [private sector] eased 0.3% m-o-m and 18.7% y-o-y to €153.4bn in August, corresponding to 73.5% of GDP from 92.2% at YE’10. It is also noteworthy that total deposits [euro and non-euro area residents] slipped by €0.5bn or 0.3% m-o-m to €179.6bn in August, while outflows stand at €22.5bn y-t-d, implying a 11.1% drop to YE’11 balance.

Although the outlook is less fragile in my view, compared to that prevailing in May and June, upcoming political and macro developments, particularly regarding the disbursement of the next tranche and the impact of new austerity measures on real economy, will drive deposit evolution in the coming months.

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