In 2014, household deposits grew in all three Baltic States due to the rise in incomes, trust towards banks, and also due to the adoption of the euro in Lithuania. This year the volume of financial assets is expected to grow due to the growth of incomes and the low inflation, reveals the Baltic Household Outlook compiled by SEB.
Last year, private deposits grew 14.8 per cent in Lithuania. The growth of deposits was not as impressive in Latvia and Estonia, but still significant – 8 and 8.4 per cent, respectively. By the end of 2013, the volume of the deposits per resident reached EUR 4096 in Estonia, EUR 3416 in Lithuania and EUR 2618 euros in Latvia.
“The rapid growth of bank deposits in Lithuania was mainly related to the adoption of the euro. Cash was brought to banks to facilitate converting it into euros. The last data shows that unlike the other Baltic states, the money has not been withdrawn from the accounts after the adoption of the Euro,” commented Julita Varanauskienė, economist at SEB Lithuania.
Other factors promoting the growth of deposits – increased incomes and solid trust of the banking sector – are similar in all three Baltic States. In 2014, the growth of deposits surpassed the growth of salaries and pensions. Families saved a certain portion of their increased income and did not spend the entire amount on consumer goods, regardless of deposit interest rates being at a record low level.
“Further on, we are expecting growth in the financial assets of families in all three countries. The experience of the economic crisis emphasises the need to create a money reserve, and private persons are continuing to save in a favourable economic environment,” added Triin Messimas, financial expert at SEB.
The full Baltic Household Outlook can be read in English, here: www.seb.ee/BHO_aprill_2015
