Spanish banks have been dragging their feet for months interest paying customers for it deposit. Thus, the rate of term savings products increased less than other times The increase in the European Central Bank’s official interest rates (ECB) and is also one of the financial sectors that has increased these the least recently. eurozone. It’s a strategy that organizations don’t plan to change even in 2024, as they noted in their latest presentation of annual results. “We expect the cost of deposits to increase in Spain in 2024, but this A much slower pace than 2023“Given the decline in interest rates,” he said. Leopoldo AlvearSabadell’s finance director successfully summarizes the prevailing vision in the industry.
Beings hide behind the truth Credit interest In Spain regarding the country’s public debt Less than euro area. In addition, the demand for credit is low and wide liquidz does not require them to take deposits to fund these loans, so they do not feel pressure to increase their wages. “If you don’t have customers in a restaurant, you don’t prepare food. If you don’t have anyone to lend it toyou don’t want to withdraw more deposits and therefore you pay less. “It’s a matter of supply and demand,” I argue. Ana BotínChairman of Santander.
They don’t even worry that it means reduce quantities Customers deposit it into their own escrow. “In Spain today, our loans represent 87% of our deposits. Deposits are not a scarce resource. It’s okay if you lose some of the depositBecause credit growth is not there. In this content, pay too much It does not work due to deposits, There’s no need“, caught Onur GençCEO of BBVA.
descents on the horizon
Behind all this lower interest rates Market like Euribor. inflation There was a faster than expected decline in the Eurozone last year. Added to: weakness of economy This led investors to predict that the monetary union would continue. ECB begins cuts The price of money is earlier and stronger than expected. Therefore, an environment where reference interest rates are lower means that banks now expect a lower increase in the cost of deposits than they did a few quarters ago.
Actually, they don’t rule out coming down Average rates will then be lowered once the cycle of lowering reference interest rates has been approved and consolidated by the ECB, the start of which is in principle planned for the summer. “ rates are now down not upwards, and then, as makes sense in trade policy, Whether we can adapt fees “-we are tying not only deposits but also loans to market conditions, as we already do downwards,” said the CaixaBank CEO. Gonzalo Gortazar.
No war in sight
Another relevant factor explaining the low fee for deposits is that, unlike previous events, no bank decided to break the market very high odds offer Stealing customers from the competition, forcing other organizations to react. “We are very pleased Confirm that the situation in Spain is comfortable, at least at the system level. There is no single player or a single major player performing some type of exercise pressure to collect deposits“congratulated Javier PanoFinance director of CaixaBank.
Probably slight increase in cost In addition, the deposits planned by banks Don’t come here because of the exchange rate increase. It is paid for by an increase in fee-based savings and a decrease in balances deposited into barely-charged checking accounts. Like this 87.3% of money Households held in institutions in December accountsbarely of average interest 0.15%. However, in previous interest rate hike cycles, savings were distributed equally between accounts and deposits. 50% and 60% things that families keep in banks. That is, even if the interest rate and volume of term deposits increase, total amount will continue to be for organizations much smaller compared to similar episodes in the past.
small rise
Since the ECB started tightening monetary policy in December 2021, monthly average rate Rate of new term deposits made to Spanish households 0.06% to 2.57% since last December. In the same period, euribor a year has passed -0.502% to 3.679% and ease of deposit ECB – most relevant in the current context, the interest it pays on money it holds in banks – has increased since February -0.5% (gave them back less than he kept) 4%.
That is why the rate of new deposits in Spain has increased 2.51 pointsMuch less than Euribor (4,181 points) and ECB reference rate (4.5 points). Additionally, the average interest on new deposits made to families is eurozone rose from 0.23% to 3.29% (3.06 points) in the same two-year period. As a result, the average rate deposit balance Household term loans (not just new operations) rose from 0.04% to 0.04% in Spain. 1.9%In the Eurozone, this rate is lower than 1.14%. 2.35%.
Source: Informacion
James Sean is a writer for “Social Bites”. He covers a wide range of topics, bringing the latest news and developments to his readers. With a keen sense of what’s important and a passion for writing, James delivers unique and insightful articles that keep his readers informed and engaged.