Latest BoG data show that deposit flow resumed a positive trend in the Greek market in February with inflows of €2.69bn following the marginal outflows of €0.17bn in January and the significant inflows of €5.75bn in December. February flow is entirely attributed to time inflows of €3.05bn, while sight and savings exhibited minor outflows of €0.24bn and €0.12bn respectively.
Time deposit balances had surpassed the €100bn mark in January for the first time since December ’11, while their annual growth rate accelerated at high single-digit levels to 8.2% in February from 2.1% in January. It is also noteworthy that time deposits recorded inflows for eighth consecutive month (cumulative amount at €17.0bn since July ‘12).
More specifically, time deposits rose 3.3% m-o-m and 8.2% y-o-y to €104.6bn. Monthly inflows remained almost stable m-o-m at €3.05bn in February from €3.17bn in January. Savings retreated 0.2% m-o-m and 14.0% y-o-y to €43.5bn with marginal outflows of €0.12bn in February from €1.20bn in January. Sight deposits slipped 1.3% m-o-m and 7.1% y-o-y to €15.8bn. Monthly flow remained slightly negative with outflows of €0.24bn in February from €2.13bn in January.
Overall, deposits [private sector] rose 1.9% m-o-m and marginally eased 0.2% y-o-y to €164.0bn in February, corresponding to 85.3% 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 €1.80bn or 0.9% m-o-m to €195.6bn, also reflecting non-euro area residents’ outflows of €1.53bn.
It is reminded that deposit inflows amounted to €11.3bn in H2’12 (i.e. post elections and coalition government formation) partially reversing the substantial outflows of €24.1bn recorded in H1’12. As a result, 2012 outflows stood at €12.8bn materially lower compared to the €35.6bn and €28.4bn 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 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 improved (depositor) sentiment after June elections and December Eurogroup decisions has a positive impact mainly on time deposits, with cumulative inflows of €17bn over the past eight months. Although time depositor sentiment is on the upside, recent Eurogroup President and other top eurozone officials’ statements for bail-in in bank savings could potentially hamper current positive trends.