Central Bank: Record population deposits, term savings slightly down

SARAJEVO, (Patria) - According to CBBiH data, at the end of September 2021, total population deposits with commercial banks in BiH amounted to 14.49 billion KM, which is the highest recorded level. Population deposits have by far the largest share in total deposits with commercial banks, 53.4%, and therefore represent an important basis for financing and the functioning of banks.

If we consider population deposits by maturity structure, term and savings deposits in September 2021 amounted to 5.46 billion KM or 37.7% of total population deposits, of which short-term deposits accounted for 318 million KM (5.8%), and long-term deposits 5.14 billion KM (94.2%). Transaction accounts and demand deposits accounted for 9.03 billion KM or 62.3% of total population deposits.

The population in BiH continuously increases total deposits, so compared to the situation at the end of September last year, they increased by 1.15 billion KM or 8.7%. However, there are significant differences in deposit movements depending on the type of deposit. Transaction accounts increased by 19.8% (or 854 million KM), and demand deposits recorded an increase of 9.3% (or 327 million KM). Term and savings deposits, which reflect savings, recorded a slight decrease of 0.6% (34 million KM) on an annual basis. The stagnation of population term and savings deposits has been evident since April 2020.

The stagnation of population term and savings deposits was influenced by unfavorable economic conditions during the pandemic, as many citizens experienced reduced income and therefore could not save as in previous periods, and used part of their savings to cover current needs.

Interest rates on population term deposits have been continuously declining in recent years. Interest rates for EUR term deposits with an agreed maturity of 1 to 2 years decreased from 3.279%, which was the average rate for 2013, to 1.06% in the first eight months of 2021. At the same time, interest rates for deposits with an agreed maturity of over 2 years amounted to 1.159% in the first eight months of 2021 (3.95% in 2013). For the same observed period, interest rates on KM term and savings deposits with an agreed maturity of 1 to 2 years decreased to 0.719%, and for maturities over 2 years to 0.957%.

Regional research shows that a relatively small number of citizens in BiH save, about 20% stated that they have savings, and only 15% of surveyed citizens confirmed in 2019 that they save continuously.

A stable domestic banking sector, along with a reliable deposit insurance system, provides a guarantee to the population that their financial resources are held in bank accounts, through which they conduct current transactions or save for later periods.