Greek banks expect a considerable increase in the inflow of deposits within 2018: As a baseline scenario, the four systemic lenders project the rise in deposits from households and enterprises to top 7 billion euros, with the optimistic scenario putting the figure at more than 15 billion euros.
Bank officials note that the inflow will stem from the return of cash stashed in mattresses and safe deposit boxes, from funds in investment products abroad, from the growth of the economy (as gross domestic product is anticipated to expand 2.5 percent in 2018), and from another strong performance by the tourism sector.
They say that unless the above are upset by unexpected negative developments, the increase in deposits should be around 15 billion euros. At the end of 2017 private sector deposits amounted to 126.35 billion euros.
Stability and positive sentiment are crucial, credit sector officials note, pointing to the picture recorded in 2017 that was split into two distinct periods: the first four months, when uncertainty dominated due to the delay in the second bailout review, and the rest of the year, when the agreement with the creditors resulted in a gradual and steady trickle of deposits back into local banks, amounting to 7.4 billion euros in total over the May-December period.
On an annual basis the increase in private sector deposits amounted to 4.9 billion euros, or 3.9 percent, more than offsetting the significant outflow in the first four months of last year.
Half of the cash that households returned to their accounts last year is believed to have previously been hidden at home and in safe deposit boxes. The increase in enterprises’ deposits is attributed to the repayment of dues by the state, the excellent tourism season and the general improvement in economic activity in 2017.
Bank officials add that had the second bailout review been completed on time, then deposits would have been much higher last year. This year is starting out with a very positive sentiment as the conclusion of the third review – the first to have been completed on time – has further strengthened confidence in the banking system and the economy in general, paving the way for a considerable increase in liquidity for the credit sector.