Latest BoG data show that deposit flow in the Greek market turned marginally negative in March with outflows of €0.14bn following inflows of €2.69bn in February and slight outflows of €0.17bn in January. March negative flow is attributed to time and savings deductions of €0.40bn and €0.13bn respectively more than offsetting sight inflows of €0.32bn. It is noteworthy that time deposit flow turned slightly negative in March for the first time since Jun ’12, yet cumulative inflows stand at €16.6bn over the Jul ’12 – Mar ’13 period.

More specifically, time deposits eased 0.2% m-o-m and rose 4.8% y-o-y to €104.4bn. Monthly outflows stood at €0.40bn from inflows of €3.05bn in February. Savings retreated 0.2% m-o-m and 11.5% y-o-y to €43.4bn with marginal outflows of €0.13bn flat m-o-m. Sight deposits increased 2.2% m-o-m and slipped 2.6% y-o-y to €16.2bn. Monthly flow remained slightly positive with inflows at €0.32bn from outflows of €0.24bn in February.

Overall, [private sector] deposits remained flat m-o-m and eased 0.8% y-o-y to €164.1bn in March, corresponding to 85.9% 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, 7.3% in December ’12 and 0.8% in March ‘13. It is also noteworthy that deposit inflows stood at €2.4bn in Q1’13, fully attributed to time inflows of €5.8bn more than offsetting sight and savings outflows of €2.0bn and €1.5bn respectively.

Furthermore, total deposits [euro and non-euro area residents] marginally increased by €0.08bn m-o-m to €195.6bn in March, also reflecting general government inflows of €1bn and an equal amount of non-euro area residents’ outflows.

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 and unemployment rise in the Greek market and their consequent impact on household savings. In particular, according to the latest official data released by ELSTAT, household disposable income retreated by €3.1bn or 8.3% y-o-y in Q4’12 to €32.3bn, reflecting a drop in employee compensation by 13.0% and social benefits by 5.0% and an increase in taxes by 8.0%. Note that a similar trend was also recorded in the previous quarters at higher contraction rates.

On the contrary, the improved (depositor) sentiment after June ’12 elections and December ’12 Eurogroup decisions has a positive impact mainly on time deposits, with cumulative inflows of €16.6bn over the past nine 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 Q1’13 positive trends.