The financial situation of households in the Baltic States has improved thanks to favourable changes on the labour market and growth in mean wages, reveals the new economic analysis of Baltic households by SEB. Growth in people’s savings has significantly outpaced that of their financial obligations. According to data available to SEB, in Latvia and Lithuania savings grew faster among those clients who had already previously deposited larger amounts. Among Estonian clients, growth in deposits has been more equal among various depositor groups.
Deposits remain the most popular saving method in all three Baltic States. Of the three Baltic States, deposits have grown the fastest in Lithuania, where in Q2 2015 they were 16 per cent higher year on year. Rapid growth in Lithuania was driven by the transition to the euro, in the lead-up to which many people deposited their cash savings with banks. In 2014, something similar was experienced by Latvia, where the transition to the euro increased the volume of bank deposits by nearly one-fifth. However, in Q2 2015, deposits also grew rapidly in Estonia and Latvia – by 8 and 9 per cent, respectively.
This rapid growth in deposits has been facilitated by the situation on the labour market. In the Q2 2015, mean net wages rose 7.3 per cent in Estonia, 7.5 per cent in Latvia and 4.4 per cent in Lithuania. Improved incomes allow people to save up more, and bank accounts or term deposits provide the most convenient options for this.
Among SEB clients, differences may be observed in the growth of deposits. In Latvia and Lithuania, deposits have grown most in the case of clients who had already previously deposited significant amounts in the bank. In Estonia, growth in deposits has been much more equal and linked less with how much had already been deposited previously. From June 2014 to June 2015, deposits of SEB clients in Estonia grew approximately 6 per cent, a rate similar almost across all the depositor groups. Deposit growth was lower only among those clients whose previous savings at the bank had been below EUR 100.