BUSINESS

Recent shift to savings favors banks

ELEFTHERIA KOURTALI

TAGS: Banking

The swing of Greek households to bank savings, partly due to the coronavirus pandemic, is giving local banks some much-needed breathing room, Moody’s said on Monday.

Based on an analysis of the latest Bank of Greece data on trends in deposits, it emerges that a large share of depositors have abandoned time deposits in favor of savings or working capital accounts that have a lower cost for lenders, bearing very small interest rates.

Therefore, Moody’s says, while the pandemic created major challenges for the credit sector – limiting quality lending and suppressing commission and transaction revenues – this consumer shift could significantly ease the pressure on Greek banks’ profits.

BoG figures for May showed an increase by 1.5 billion euros in household and corporate deposits compared to April, reaching €144.5 billion. Moody’s noted that Greek households are gradually turning to sight and saving deposits where interest rates are next to zero, against time deposits that have higher interest rates. According to BoG data, time deposits accounted for 34% of all deposits in May, compared to 41% in December 2017.

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