According to data from the Croatian National Bank (HNB), total deposits held by Croatian commercial banks reached HRK 325.4 billion at the end of October 2020, increasing both month-on-month and year-on-year.
Deposits surged by 2.6 billion or 0.8% compared to September 2020, and by HRK 22.6 billion or 7.5% compared to October 2019, keeping up their upward trend since the end of 2011.
Total deposits consist of demand deposits and savings and term deposits, while demand deposits include money in transaction accounts and banks’ obligations arising from kuna payment instruments issued.
Demand deposits rose by 0.7% from September to HRK 120.2 billion in October, accounting for 36.9% of total deposits. Compared to October 2019, demand deposits rose by 17.4% to HRK 17.8 billion, continuing their double-digit upward streak since September 2015.
Analysts at Raiffeisen Bank (RBA) estimate that these trends reflect low interest rates on term deposits, which led to disposable income being redirected to highly liquid types of deposits.
Total savings and term deposits both in national and foreign currencies grew on a monthly basis by HRK 1.7 billion or 0.9%, continuing their annual growth for nine straight months by HRK 4.8 billion or 2.4% to reach HRK 205.2 billion at the end of October.
More than 85% of savings and term deposits were denominated in foreign currency, predominantly euros, and were mostly generated by households.
Total currency deposits rose by HRK 1.2 billion or 0.7% from September 2020 and by HRK 8.1 billion or 4.8% from October 2019, keeping up their upward tendency since July 2019.
The kuna depreciated against the euro by 0.3% compared to September 2020 and by 1.7% in relation to the end of 2019.
RBA analysts explain that a likely decline in future household disposable incomes and difficulties in the real sector could slow down the growth of total deposits with banks. Nonetheless, they expect demand deposits to continue growing the most due to low interest rates, a high inclination to hold liquid assets and a disinclination to invest in other financial assets. /ibna