Deposits and credit on the decrease

Deposits redeemable at notice and credit issued to Maltese residents were on the decrease during the month of March 2012.

Statistics issued by the Central Bank of Malta show that deposits belonging to residents of Malta and held with resident monetary financial institutions (MFI) expanded by €66.7 million or 0.8%, during the month of March 2012.

This reflected an increase in overnight deposits, which went up by €48.5 million or 1%, together with growth in deposits with an agreed maturity up of to two years, which rose by €22.4 million or 0.6%. Conversely, deposits redeemable at notice up to three months fell by €4.1 million or 3.2%. The annual growth rate of total deposits decelerated to 4.1% in March from 5.7% in February.

The Central Bank of Malta said that the March increase in overnight deposits was mostly attributable to higher balances held by households and non-financial companies (NFCs), while the rise in deposits with an agreed maturity of up to two years was fuelled by non-bank financial intermediaries.

Credit issued by resident MFIs to residents of Malta (including government) contracted by €19.9 million, or 0.2%, in March. Consequently, annual credit growth dipped to 6.4% from 6.8% in February.

Credit to general government dropped by €17.2 million or 0.7%, driven by reduced banks holdings of Malta Government Stocks. On an annual basis, growth decelerated to 12.9% from 13.9% in February. Similarly, credit to residents outside the general government declined marginally by €2.7 million mostly due to lower bank holdings of securities issued by public NFCs, while loans to residents declined by €0.3 million. Loans extended to households (mainly to finance house purchases) expanded during the month reviewed, but this was offset by a decrease in loans extended to NFCs. As a result, the annual growth rate of credit to other residents slowed down to 4.6% from 4.9% in February.

During March 2012, net foreign assets held by resident MFIs decreased by €187.5 million or 1.6% as foreign assets declined whereas foreign liabilities increased. The latter was brought about by a significant increase in deposits belonging to non-residents. Meanwhile, the drop in foreign assets stemmed mainly from a decline in deposits belonging to resident banks held with banks abroad. In annual terms, net foreign assets expanded by 3.8%, down from 6.8% in February.

Net foreign assets are composed of claims held by MFIs residing in Malta on residents of the rest of the world, less liabilities to them. Residents of the rest of the world include non-euro area residents and residents of euro area countries other than Malta.