Barring any surprises, bank deposits will go through the current cycle of interest rate hikes unscathed. Its yield will have seen a late rise in late 2022, peaked modestly in 2023 and started to decline early in 2024, before the ECB starts cutting interest rates in June, according to analysts' forecasts .
The remuneration of bank deposits has accumulated three months of decline and is already at the levels of September last year, at 2.36%, according to the latest data from the Bank of Spain corresponding to February. It is a percentage increasingly distant from the 2.6% in November 2023 and, of course, a much lower reference than the inflation of 3.2% in March.
There are exceptions among new banks and smaller entities, but returns in Spain are 34% below the Eurozone average of 3.17%, according to ECB data. Among the main economies, Italy registers 3.7%, France 3.6% and Germany 3.2%.
The low remuneration of deposits has earned comments from the Vice President of the ECB, Luis de Guindos, who has repeatedly insisted that rate hikes "are for everyone". The Minister of Economy, Carlos Cuerpo, explained these days that the Spanish Government has also asked the CNMC to analyze whether there is effective competition in deposits.
The banking sources consulted offer four arguments. The first: when ECB rates were negative, banks were already giving something, albeit little, for deposits. The second: deposits yield less than in the euro zone, but mortgage loans are also lower, in no case at the 4.5% level of interest rates. The third: there is still enormous liquidity in the system despite the repayment of special pandemic loans, so banks have no need to raise resources from individuals. And the fourth: Spaniards tend to leave the money in current accounts rather than retain it in deposits. In other words, they already keep the money in the bank and the entity has no incentive to remunerate them.
Since the beginning of the year, Spanish households have transferred nearly 28,000 million euros from current accounts to one-year deposits, according to data from the Bank of Spain. It's the biggest pace since 2017 and responds, reports from S
The Bank of Spain calculates that Spanish households now have 856,890 million euros in current accounts and 142,250 million in time deposits, when at the beginning of 2023 they had 928,375 million euros in sight and 65,473 million in time deposits. While raising the return on their money at least modestly, households now have the lowest debt since 2006, at around 452 billion.
