The strong growth in bank deposits slowed in May
Economist at Eesti Pank
The bank deposits of households in Estonia increased by 13 million euros in May, which is a notably smaller increase than in the first months of the year, when around 200 million euros a month was added to deposits. The smaller growth in deposits was probably driven largely by the relaxation of coronavirus restrictions at the start of May, which facilitated consumption.
Bank deposits have grown rapidly throughout the whole of the pandemic. Household deposits have increased by 16% over the past year to total more than 10 billion euros. Deposits have also grown rapidly in other countries, but the increase in Estonia has been faster than the average in the European Union.
The growth in deposits has been pushed by forced saving. This occurred because various normal expenses have not been possible while travel and many forms of entertainment and leisure have been restricted, and while the temporary closure of shopping centres reduced the opportunities for shopping. On top of the forced saving, the pension reform has already increased deposits in the first half of this year as people of retirement age or close to it were able to take their money out of the second pension pillar if they wanted to.
The relaxation of the pandemic restrictions in May this year slowed the growth in deposits as it did last spring. This indicates the relatively rapid recovery in the consumption of goods and services as the restrictions are eased. It can be expected that if there are no new restrictions, deposits in banks will increase by less during the summer months. Substantial additional growth in deposits is expected in September when large payouts are made to those exiting the second pension pillar.
The bank deposits of Estonian companies have grown very rapidly, increasing by 17% over the past year to total 8.7 billion euros. The cause of the strong growth was a large increase in deposits in one month at the end of last year. The amount of money deposited by companies in banks has remained quite stable in the first months of this year, partly because of the recovery in corporate investment activity. The yearly growth in corporate deposits has also been fast elsewhere in the European Union. The support measures from governments to help companies during the pandemic have made a substantial contribution to this in some countries.
Eesti Pank published the statistics for credit institutions and lease companies for May on its website today. The statistical release describes the main changes in the statistics on credit institutions and leasing companies, covering the volume and structure of assets, loans and leases issued, deposits, and interest rates on loans and leases. The statistical release is independent of economic policy releases and is presented separately from them.
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