Total deposits held in Croatia's commercial banks reached 288 billion kuna (€38.7 billion) at the end of September 2018, up by 14 billion or 5.2 percent up over the last 12 months, Raiffeisenbank Austria (RBA) analysts said in a comment of central bank figures on Thursday.

This means that the trend of increasing deposits which began in December 2011 continued almost seven years on.

The jump was mainly thanks to strong increase in demand deposits, which include funds held in bank accounts, exceeded 86 billion kuna (€11.6 billion) in September, up 23.8 percent year-on-year.

On the other hand, total savings and time deposits have been on the decline since October 2016. At the end of September, they stood at 202 billion kuna (€27.2 billion), down 1.1 percent year-on-year.

The fall in savings and time deposits is the result of a fall in foreign currency deposits, as kuna-denominated savings and time deposits rose both in month-on-month and year-on-year terms, exceeding 35 billion kuna (€4.7 billion), RBA said.

Foreign currency savings and time deposits, which account for about 82 percent of all savings and time deposits, fell by 1.5 percent to 166.5 billion kuna (€22.4 billion) year-on-year.

“The structure of deposits and the trends shown indicate the clients’ increased inclination to hold liquid assets, which is motivated by record-low interest rates on savings,” RBA analysts said, adding that this came as a result of high liquidity in the financial system caused by the central bank’s expansionary monetary policy.

Going foward, RBA analysts said that Croatia’s financial system would continue to experience high levels of liquidity throughout 2018, which, along with modest lending growth rates, implied a continuation of low passive interest rates. As a result, increased amounts of savings are likely to be more directed into demand deposits, and less into time deposits.

(€1 = 7.43 kuna)

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