Latest BoG data show that deposit flow in the Greek market remained negative for second consecutive month in April with outflows increasing to €1.57bn from of €0.14bn in March and inflows of €2.69bn in February. April negative flow is most likely attributed to recent developments in Cyprus and fully reflected time net deductions of €2.33bn, more than offsetting sight and savings inflows of €0.66bn and €0.12bn respectively. It is noteworthy that time outflows in April were the highest since June ’12.
More specifically, time deposits eased 2.4% m-o-m and rose 2.6% y-o-y to €101.9bn. Monthly outflows rose to €2.33bn from €0.40bn in March. Savings increased 0.2% m-o-m and retreated 11.8% y-o-y to €43.5bn with inflows of €0.12bn from outflows of €0.13bn in March. Sight deposits increased 3.9% m-o-m and slipped 2.6% y-o-y to €16.8bn. Monthly flow remained positive for second month in a row with inflows rising to €0.66bn from €0.32bn in March.
Overall, [private sector] deposits eased 1.1% m-o-m and 2.2% y-o-y to €162.3bn in April, corresponding to 85.3% of GDP. Note that despite April outflows, 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 2.2% in April ‘13. It is also noteworthy that y-t-d deposit inflows stood at €0.81bn, fully attributed to time inflows of €3.50bn more than offsetting sight and savings outflows of €1.38bn and €1.34bn respectively.
Furthermore, total deposits [euro and non-euro area residents] dropped by €5.29bn or 2.7% m-o-m to €190.3bn in April, also reflecting general government outflows of €3.56bn.
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.
Although the positive trend evident in H2’12 until February ’13 has been affected in March and April by the recent developments in Cyprus and potential bail-in in bank savings in the future, an improving outlook and depositor sentiment may be anticipated post bank recap also fuelled by the gradual recovery of the economy in the next 2-3 quarters.