Record amount for households’ deposits in BiH

Record amount for households’ deposits in BiH

The Central Bank of Bosnia and Herzegovina (CBBH) said that Bosnia and Herzegovina citizens marked the World Savings Day with the largest amount of savings deposits recorded so far.

According to the CBBH data, at the end of September 2018, total household deposits with commercial banks in BiH amounted to BAM 11.83 billion (about 5.69 billion euros) the highest level recorded since the CBBH’s establishment.

Deposits of households have the largest share in total deposits with commercial banks, at 55.4%, and therefore represent an important basis for the financing of banks and their “functional” ability.

“Observing household deposits by maturity, term deposits and savings deposits in September 2018, they amount to BAM 5.45 billion (about 2.72 billion euroa) or 46.1% of total household deposits, out of which short-term deposits amount to BAM 500 million (about 2.5 million euros), and long-term BAM 4.95 billion (or about 2.47 billion euros). Transaction accounts and demand deposits make 6.38 billion BAM (about 3.19 billion euros) or 53.9% of total household deposits”, said CBBH on the occasion of the World Savings Day.

Regarding the currency structure, according to the CBBH, household deposits in domestic currency amounted to BAM 5.54 billion (about 2.22 billion euros) or 46.8% of the share, which is significantly higher than six years ago when the share of deposits in domestic currency was 36.4%. Deposits in euros amounted to BAM 5,70 billion (about 2.85 billion euros) or 48.2%, while deposits in other foreign currencies amounted to BAM 591 million (about 295.5 million euros) or 5%.

Bosnian households continuously increase their deposits, thus, compared with the situation in September 2017, they increased by as much as BAM 808.9 million (about 404 million euros) or 7.8%. However, there are significant differences in the pace of growth depending on the type of deposits. The fastest growing are transaction deposits, which grew by 18.0% (or BAM 489 million – 244.5 million euros), demand deposits that went up by 14.4% (i.e. BAM 311 million – 155.5 million euros). Time deposits and savings accounts, which reflect savings, slightly increased and grew at an annual rate of 0.3% (BAM 18 million- 9 million euros).

In a press release, the CBBH estimated that the slower growth of the households’ term and savings deposits is also affected by the continuous decline in interest rates in recent years. Interest rates on households deposits in the euro currency recorded a continuous decline over the past five years, with lower oscillation. Thus, for time deposits of households in euros, with agreed maturity from 1 to 2 years, they were reduced by 3.279%, the average rate for 2013, down to 1.188% in the first nine months of 2018.

At the same time, for term deposits with an agreed maturity of over 2 years, they were somewhat higher, but with the same downward trend of 3.945% in 2013 to 1.462% in the first nine months of 2018. During the same period, interest rates on households term and savings deposits in BAM, with agreed maturity from 1 to 2 years, decreased from 3.262% to 1.276% and for term deposits over 2 years, from 3.661% to 1.371%.

“A stable domestic banking sector, with a reliable deposit insurance system, provides a guarantee to households to keep their financial assets in accounts in banks, through which they conduct current transactions or save for later times. Based on this confidence and the citizens entrusted funds, banks are able to provide financing and contribute to more efficient functioning and growth of the economy, and to assist in reducing informal transactions”, the CBBH concluded…. / IBNA