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Maltese-owned deposits rise by €110.6 milliion – Central Bank
Deposits belonging to Maltese residents rose by €110.6 million in June, according to the Central Bank of Malta.
29 October 2010, 12:00am
Nestor Laiviera
Nestor Laiviera
4 min read
In its commentary detailing monetary statistics for June 2010, the Central Bank of Malta (CBM) said that the contribution of Maltese Financial Institutions (MFIs) to the euro area broad money stock (M3) increased by 1.4% month-on-month, or €125.1 million, in June, reversing the 0.6% drop recorded in the previous month.
“This contribution reached €8.9 billion at the end of June. As a result, the annual rate of growth accelerated to 3.1% from 1.7% in May.”
The CBM also said “the narrow money (M1) component expanded by €205.4 million, or 4.4%, during the month reviewed, driven mainly by a 5.1% increase in overnight deposits.”
Overnight deposits belonging to Maltese residents increased by 4.9%, primarily on account of a significant rise in balances belonging to private non-financial companies, it added.
“Higher deposits held by households and insurance companies also contributed, though to a lesser extent. Meanwhile, deposits belonging to other euro area residents rose by around 22%, while currency issued rose marginally.”
Overall, the CBM said, “the annual rate growth of M1 continued to accelerate, rising from 16.9% in May to 19.5% in June.”
“After having contracted in May, the intermediate money component (M2) expanded by 1.3%, or €115 million, in June. This was entirely attributable to the increase in M1, which outweighed a drop in deposits with an agreed maturity of up to two years.”
The latter, the CMB said, extended the downward trend seen earlier in the year, falling by 2.3%, or €91.3 million.
“This decline was primarily brought about by a 2.1% fall in deposits belonging to Maltese residents, which predominantly reflected a drop in the balances held by private non-financial firms.”
“Conversely, deposits redeemable at up to 3 months notice increased marginally.”
In sum, deposits belonging to residents of Malta rose by €110.6 million in June, the CMB said. “The increase in overnight deposits offset the decline in deposits with an agreed maturity of up to two years”.
“Consequently, the annual rate of growth of residents’ deposits increased to 3.4% from 2.1% in May.”
“Credit to residents of Malta decreased by €8.8 million, or 0.1%, during June. A drop in MFI holdings of Malta Government Stocks outweighed a rise in their Treasury bill portfolio, and led to a contraction of €22.8 million in credit to government,” the CBM said.
“On the other hand,” it added, “credit to other residents went up by €14.0 million, as loans to non-bank financial intermediaries and households rose significantly. Overall, the annual rate of growth of credit to Maltese residents slowed down to 8.2% in June, from 9.7% one month earlier.”
Meanwhile, the CBM added how credit to residents of other euro area Member States decreased by €78.1 million, fuelled primarily by a drop in bank lending to non-bank financial intermediaries. “As a result, during the month reviewed credit to all euro area residents declined by €86.9 million, or 0.6%.”
The external counterpart of M3, which reflects transactions between MFIs resident in Malta and non-euro area residents, increased by EUR1.1 billion, or 14.3%, in June.
This was because, it said, “MFIs’ liabilities to non-euro area residents declined considerably.”
“In particular, time deposits belonging to private non-financial companies and foreign loans taken up by resident credit institutions decreased.”
“To a much lesser extent, MFIs’ claims on non-euro area residents also fell reflecting a drop in their holdings of securities issued by non-euro area governments and a reduction in loans granted to non-euro area residents.”
“The ‘other’ counterparts of M3 went up by €891.6 million, or 6.7%, during the month under review,” the CMB said, adding that “it was mostly attributable to an increase in long-term financial liabilities in the form of equity, resulting from the entry into the market of a newly-licensed credit institution. Interbank transactions taking place across the euro area, which are included in ‘other liabilities (net)’, also increased significantly.”
“The weighted average interest rate applied by resident credit institutions to customer deposits declined slightly to 1.37% from 1.39% in May, while that charged on loans increased by 23 basis points to 4.69%.”
