Maltese residents' deposits decline

The contribution of Maltese Monetary Financial Institutions (MFIs) to the euro area broad money stock (M3) in May decreased following two consecutive monthly rises, the Central Bank said.

It said this contracted by €54.4 million, or 0.6 per cent, to €8.7 billion. Consequently, its annual rate of growth eased to 1.7 per cent from 3 per cent in April.

The Central Bank said that in May, the narrow money (M1) component went up by €70.7 million, or 1.5 per cent, mainly due to a rise in overnight deposits.

Deposits belonging to Maltese residents expanded by 1.7 per cent, as balances held by resident insurance companies, other non-bank financial intermediaries and private non-financial firms increased significantly.

However, overnight deposits belonging to residents of other euro area countries fell slightly. Currency issued, meanwhile, grew by €9.3 million, or 1.5 per cent. Thus, the annual rate of growth of M1 rose further to 16.9 per cent from 15.6 per cent in April.

Notwithstanding this increase in M1, the month under review saw a drop in the broader intermediate money (M2) component of €76.4 million, or 0.9 per cent.

This was due to a sharp drop in deposits with an agreed maturity of up to two years, which contracted by €147.3 million, or 3.5 per cent.

Deposits belonging to Maltese residents went down by 3.7 per cent after having been stable in April. Balances held by private non-financial firms accounted for most of the decline. Meanwhile, deposits redeemable at up to three months’ notice increased marginally.

Overall, deposits belonging to residents of Malta declined by €85.8 million during May. The decline in deposits with an agreed maturity of up to two years completely offset a pick-up in overnight deposits. As a result, the annual rate of growth of residents’ deposits fell to 2.1 per cent from 3.2 per cent last month.

Credit to residents of Malta expanded by €153.5 million, or 1.5 per cent, during May. Bank purchases of government securities on the primary market pushed up credit to the general government by €123.7 million.

Concurrently, credit to residents outside the general government sector went up by €29.8 million, as loans granted to households for house purchases and to the wholesale and retail trade sector in particular increased. The annual rate of growth of credit to Maltese residents climbed to 9.7 per cent from 8.5 per cent in April.

Meanwhile, credit to residents of other euro area member states rose by €189.5 million, as resident MFIs bought debt securities issued by other euro area governments and gave out loans to non-financial companies residing elsewhere in the euro area.

As a result, during the month reviewed credit to all euro area residents expanded by €343 million, or 2.5 per cent.