Inflation continues to take its toll (the CPI closed September at 3.5%, according to INE). The increase in the cost of loans, especially loans signed at a variable rate, has not stopped (the daily Euribor rate has exceeded 4.2% for six days in September). Added to this is the low remuneration of banks (in July they offered 2.36% for a year, below 2.83% in the euro zone). A perfect storm that left between January and August the largest withdrawal of family bank deposits in history.
Specifically, households closed August with 963,040 million euros in their accounts in the financial sector. That is, 21,847 million less than at the end of 2022, 2.22% of the total, according to data published this Thursday by the Bank of Spain. A figure that has not been seen in the first eight months of the year in the supervisor’s historical series, which exceeded 18,286 million withdrawn between January and August 2012.
The reduction occurs only in the part of the amount accumulated in demand accounts (those with zero or little profit because money is always available). If you look monthly (-7,559 million in August), compared to December last year (-52,493 million) and even at the interannual rate (-41,768 million). Meanwhile, the term value grows (4,355 million, 30,617 million and 29,746 million, respectively), but in any case at the same speed as the withdrawal.
In other words, there is a clear trend in which families facilitate the movement of money with multiple goals: in some cases, to find a profit for that money. In others, to face recurring payments and alleviate the blow of inflation and the increase in financial interest.
This process is very seasonal. In the case of families, for example, there is usually a significant increase in June and December, when part of the employees receive additional payments. However, this does not serve to increase the savings cushion and these amounts will disappear in the following months.
This happened last January, when almost the same amount that was added to bank deposits in December (about 13,000 million) was withdrawn. And this summer (between the months of July and August) the same thing happened with the increase recorded in June: two thirds of the increase of 10,000 million was lost. And experts believe that the lost will end in September, the last month of the summer holidays.
This behavior of families is also justified by the cooling economic activity. A pocket of Spaniards noticed this, becoming conservative. Of course, this time it does not allow them to increase their saving capacity, as they did during the pandemic, but at least it helps them to maintain their spending capacity as much as possible. A finite oxygen cylinder: the savings cushion created during the coronavirus crisis has been exhausted, although it currently serves to weather the storm of last year after the ECB’s interest rate hike.
“There is an early repayment of debts due to the sharp increase in Euribor, there is a shift towards fixed income given the low increase in the profitability of deposits and the more attractive rates of public debt, as well as the effect of inflation that It forces us to use savings to maintain the level of consumption, “summarized Joaquín Maudos, deputy director of IVIE and professor at the University of Valencia.
Companies withdrew another 15.2 billion
In the case of companies, the process is the same. In particular, companies withdrew 15,209 million euros from their bank deposits, the largest decrease in the first eight months of the year since 2012 (then 18,940 million were withdrawn during that period) , during the Great Recession.
“The impact of higher loan prices weighs more heavily on companies and, in addition, there is an incentive to replace external financing with own resources, as well as early repayment of bank loans,” argued Maudos. In this case, as in the case of families, the reduction occurs in demand accounts, while those in the term accounts rise. Of course, they are not of the same intensity, so there is a gap that has disappeared in the past months.
When the data are viewed together (the amount of companies, households and non-profit institutions), the withdrawal of bank deposits between January and August became 38,081 million euros, the highest ever in the first eight months of 2012, amid the financial crisis.