Bank deposits still dominant, but other forms of savings are also growing

Bank deposits are still strongly represented, but more and more citizens are turning to other forms of savings and investments, including the capital market, it was said at a roundtable organized by the Croatian Chamber of Economy (HGK) on the occasion of the World Savings Day.

According to the traditional analysis of the HGK on financial assets and deposits of the household sector, cash and bank deposits still dominate the structure of total financial assets, but the trend of their share decreasing has continued, while at the same time the share of debt securities is growing.

The gross balance of investments in debt securities of the household sector at the end of July this year amounted to 4.5 billion euros, while before March 2023 and the start of the issuance of "national" bonds and treasury bills, these investments were negligible.

“In addition to government securities, additional momentum for citizens' participation in the capital market was given by this year's three initial public offerings (IPOs) on the Zagreb Stock Exchange, with around 4,500 citizens participating in the Žito Group IPO alone,” said Vanja Dominović, Head of the Financial Institutions and Macroeconomic Analysis Department at the Croatian Chamber of Economy.

According to data from the Croatian National Bank (CNB), total household deposits at the end of August amounted to 41.9 billion euros, of which 31.5 billion euros were overnight deposits.

Highest deposits per capita in Istria County

Deposits are still concentrated to the greatest extent in the City of Zagreb, 28 percent, and the seven Adriatic counties, 42 percent, while in terms of per capita, Istria County leads, whose residents had an average deposit of 15,120 euros. The City of Zagreb follows with 14,243 euros, Dubrovnik-Neretva County with 13,823 euros, Primorje-Gorski Kotar County with 13,673 euros, etc. On the other hand, the lowest deposits per capita are in Vukovar-Srijem County, 5,014 euros, while the average at the Croatian level is 10,679 euros, according to the analysis of the Croatian Chamber of Economy.

The Chamber's chief economist, Goran Šaravanja, pointed out that all counties recorded double-digit growth in overnight deposits on an annual basis, which is in line with the aforementioned positive macroeconomic trends.

On the other hand, the decline in term deposits is primarily due to the decline in interest rates, and according to the president of the Association of Banks and Other Financial Institutions of the Croatian Chamber of Economy, Tadija Vrdoljak, interest rates on term savings are generally below two percent. As he said, “they are in line with market trends and trends in overall interest rates in the Eurozone.”

The President of the Association of Investment and Pension Funds of the Croatian Chamber of Economy, Marin Hrešić, confirmed that in recent years Croatian citizens have been investing more and more in investment funds, but this is still much less than in the rest of the EU. Thus, about five percent of the total financial assets of Croatian citizens "go" to investment funds, while in the EU it is 14 percent.

"National" securities are an example of the complementarity of savings and investments

State Secretary at the Ministry of Finance Tereza Rogić Lugarić believes that it is necessary to redefine the concept of savings in some way, because it no longer implies its most classic form but also the "fertilization" of money, that is, investments.

She stated that "national" bonds and treasury bills are an example of the complementarity of savings and investments. She reported that so far, we have already had 16 issues of the Ministry of Finance, in which citizens have subscribed to securities worth more than 11 billion euros, thus holding in their "hands" more than 8.5 percent of the public debt, and the interest they have accrued on the basis of investments exceeds 323 million euros.

Deputy Governor of the Croatian National Bank Sandra Švaljek said that given the relatively strong economic growth, which is accompanied by a significant increase in wages, there is also an increase in savings, but this growth is still slow in terms of approaching the average savings rate in the euro area.

Source: HRT