Low interest rates drive citizens away from deposits - Savings of individuals in banks grew at a slower pace in July-September
The interests of time deposits in Lek have decreased in the third quarter of the year. In average terms, they were 2.0%, from 2.2% in the second quarter. According to data from the Bank of Albania, interest rates have decreased more for deposits with a maturity of over one year.
Has this reduction in interest diminished the interest of individuals in opening a new deposit?
As a result of lower interest rates, deposits in the banking sector continued to grow at a slower rate during the third quarter. The annual growth of deposits in this period was 10.3% from 11.1% in the second quarter. This performance was mostly influenced by the slowdown to 10.4% of the growth rate of foreign currency deposits, while those in Lek slightly improved to 9.8%. The performance of deposits in lek continues to reflect, among other things, the high accumulation of government liquidity in the account with the Bank of Albania.
On the other hand, the interest on time deposits in euro registered a marginal decrease, going down to 1.3% from 1.4% that were in the previous quarter. The figures show that the difference between interest on deposits in Lek and those in Euro continues to remain stable.
In total, although slower than in the previous quarter, the growth of deposits was present both in the segment of term deposits and in that of non-term deposits. The corresponding annual growth rates were 9.4% and 11.3%, respectively. In the term deposits category, stable growth rates are observed for deposits up to two years and a slowdown in the growth rates of deposits over two years, although the latter remain at high levels around 17%, as they are more preferred by individuals. The weight of deposits over two years to the total marked a further increase to 18.4%, or 1 percentage point more than at the end of 2023.
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