Bank deposits: Greeks are returning their funds en masse

In recent years, there has been a trend in Greece towards an increase in bank deposits.

From 2021 to date, households and businesses have returned around €19 billion to banks, according to Bank of Greece data. This is 16% more than in the previous year.

The Bank of Greece's economic bulletin notes that a significant influx of deposits from households was observed over three years – from 2021 to 2023. However, the first quarter of 2024 saw a decline due to a shift to other savings methods that offer higher returns than deposits.

In August 2024, bank deposits of non-financial corporations and households increased by €0.8 million, while household deposits increased by almost €1 billion. Same month the annual growth rate of household deposits with an agreed term (time deposits) slowed to 6.3%.

Data published by the bank in its financial bulletin shows that net inflow of household and business deposits in 2021 amounted to 8.5 billion euros, in 2022 – 5.5 billion euros and 5 billion euros in 2023. This brings the total to €146.8 billion, up €20.6 billion from the start of 2021. This development reflects strengthening depositors' confidence in the banking system and to positive outlook for the Greek economy generally.

Regarding loans, then the situation is less optimistic. After peaking in September 2022 (12.3%), bank lending to businesses has declined significantly due to rising interest rates and slowing economic growth. This led to a decrease in demand for loans. However, data from the Bank of Greece shows that as of September 2023 annual business loan growth rates have recovered.

In August 2024, bank lending to business (based on net flows) increased by €100 million, with the annual growth rate accelerating to 10.5%. However, the issuance of loans to the population remains low, mainly due to the continuing decline in housing loans.

Data from the National Bank of Greece shows that the decline in bank loans to households will continue in 2024, mainly due to a decline in housing loans, albeit at a gradually slowing pace. Consumer loans have been recording small but positive growth rates since mid-2022.

In August 2024, the rate of contraction in mortgage lending remained unchanged at 2.7%, while the annual growth rate of consumer loans continued at 5.8%.

According to AnaCredit, new lending to non-financial corporations amounted to about 9 billion euros in 2023, a third less than in 2022, in line with the tightening of monetary policy. However, they significantly exceeded the corresponding amount in 2021 (€7.0 billion). For January-August 2024, payments of new business loans amounted to 7.6 billion euros compared to 5.0 billion euros for the same period last year.

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