Withdrawals from savings deposits registered since the beginning of the year by households amid financial turmoil and interest rate rises moderated in April. However, the same is not the case with companies, which continue to reduce the volume of their deposits, already at pre-pandemic levels.
According to the data published today by the Bank of Spain, the amount of bank deposits of Spanish households stood at 983,300 million euros at the end of April, 21,000 million euros less than at the end of 2022, but 500 million euros more than in March.
There is an end, at least punctually, to a sequence of monthly withdrawals caused by the banking crisis resulting from the fall of Credit Suisse and also by the rises in interest rates, which have encouraged many individuals to seek profitability formulas such as bills of Treasury, in view of the low remuneration of deposits.
“The turbulence in the financial markets and an unclear investment scenario could be behind the decision of individuals to opt for prudence, keeping their money in accounts or deposits,” says Ignasi Viladesau, investment director of MyInvestor, to describe what happened in April.
However, “bank deposits, in general, are still out of price, trading below other alternatives such as bills or monetary funds,” says Rafael Ciruelos, partner at Diaphanum.
The withdrawals recorded so far have been related to the appearance of more profitable fixed-income products, among which Treasury bills or investment funds stand out. According to Inverco, only until April this type of funds has captured 16,000 million euros.
From MyInvestor, Viladesau cites other factors to explain the withdrawals of deposits, including the desire to have the money off the banks’ balance sheet during the Credit Suisse crisis, the reduction of the “liquidity cushion” of families due to inflation or the decision to amortize part of the mortgages before the quota increases among the variables.
The CEO of Santander, Héctor Grisi, alluded precisely to this aspect in the last press conference to present the results. According to him, many individuals are dedicating part of the money in deposits to reduce the mortgage.
Although the big banks have not yet entered into a commercial battle for liabilities, Viladesau assures that some entities, “taking advantage of the ECB’s interest rate rise, are launching aggressive offers.” MyInvestor is, together with Wizink, Finantia or EBN, one of those that already offer at least 3% per year for deposits.
Despite stopping the outflow of deposits among individuals, the Bank of Spain shows that companies continue to withdraw them, reaching 293.6 billion euros in their case, the lowest figure since before the pandemic.
One of the reasons is that companies prefer to resort to their own liquidity before taking on debt. “The decrease in company resources reflected last April is motivated by a greater use of surplus liquidity, which in turn is justified by less recourse to bank financing, derived from the increase in financial costs due to the significant rise of interest rates”, affirms Cristina Mateo Reyzábal, director of Business Development for Corporate Banking at Ibercaja.
Added to this are specific needs such as those related to the payment of taxes. The month of April, recalls Mateo Reyzábal, “is usually a month of consumption of demand balances in companies, when facing the payment of taxes for the first quarter of the year.”
Bank deposits as a whole, including insurance and funds and pensions, stood at 1.63 trillion euros at the end of April. This volume of savings is less than the 1.68 million at the end of last year, although it is still above pre-pandemic levels.
“Normally, companies handle better information and tend to be faster when taking advantage of opportunities,” says Ciruelos from Diaphanum. “It is normal that many of the liquidity tips try to optimize and leave deposits towards better remunerated products and with less or equal risk,” he adds.
Another aspect that can influence from his point of view is that many companies are, given the rise in their financing costs, “reducing indebtedness” through the use of liquidity. This aspect “does not occur so much in families.”
