Latest BoG data show that deposit flow turned marginally negative in the Greek market in January with outflows of €0.17bn following the significant inflows of €5.75bn in December. January flow reflects time inflows of €3.17bn offset by sight and savings outflows of €2.13bn and €1.20bn respectively. Note that time deposit balances surpassed the €100bn mark for the first time since December ’11, while their annual growth rate turned positive for the first time since October ’09. It is also noteworthy that time deposits recorded inflows for seventh consecutive month (cumulative amount at €13.9bn since July).

More specifically, time deposits rose 3.0% m-o-m and 2.1% y-o-y to €101.3bn. Monthly inflows rose to €3.17bn in January from €2.39bn in December. Savings retreated 2.7% m-o-m and 16.5% y-o-y to €43.6bn with outflows of €1.20bn in January from inflows of €1.16bn in December. Sight deposits slipped 11.8% m-o-m and 8.3% y-o-y to €16.0bn. Monthly flow turned negative with outflows of €2.13bn in January reversing the inflows of €2.20bn recorded in December.

Overall, deposits [private sector] eased 0.2% m-o-m and 4.7% y-o-y to €161.0bn in January, corresponding to 83.4% of GDP. Note that the rate of deposit contraction is gradually decelerating from its peak of 20% y-o-y in June ’12 to 15.8% in September’12 and 7.3% in December ‘12. Furthermore, total deposits [euro and non-euro area residents] increased by €2.55bn or 1.3% m-o-m to €193.7bn, mainly reflecting general government inflows of €3.35bn.

It is reminded that deposit inflows amounted to €11.29bn in H2’12 (i.e. post elections and coalition government formation) partially reversing the substantial outflows of €24.14bn recorded in H1’12. As a result, 2012 outflows stood at €12.84bn materially lower compared to the €35.65bn and €28.37bn recorded in 2011 and 2010 respectively.

The bulk of 2012 outflows stemmed from savings (€8.6bn) primarily reflecting the ongoing recession in the Greek market and its consequent impact on household savings. In particular, according to the latest official data released by ELSTAT, household disposable income retreated by €4bn or 10.6% y-o-y in Q3’12 (from -13.6% in Q2’12) to €33.2bn, reflecting a drop in employee compensation by 11.3% and social benefits by 10.2% and an increase in taxes by 17.7%. On the contrary, the improving (depositor) sentiment after June elections and December Eurogroup decisions has a positive impact mainly on time deposits.