Deposit growth stable

APRA has released its monthly banking statistics for October and deposit growth has stabilised.

Monthly growth eased:


But year on year growth is stable above 6%:


The aggregate trend is solid:


And households are sustaining their savings habits nicely:


Amid falling income growth across the nation this says to me that households remain prudent.

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  1. So domestic savers are displacing foreign bondholders or at least financing all growth in balance sheets, thereby becoming a higher percentage of liabilities.

    Depending on whther thesefunds are coming from firms, large super funds, small super funds, or companies, this may have implications for likely recoveries in bank insolvencies should they occur, assuming the bond holders are no longer protected by government guarantees.

    The ranking and guarantee of deposits intermediated by super funds, whether arge or self managed needs to be clarified.

    This is needed both from the point of view of the household and from that of the commercial bondholder, particulalry when large superfunds are all bank controlled and therefore unlikely not to deposit cash with their major shareholder.

    Is my cash component of super in say First State going to be treated as one large deposit in CBA and not subect to any RBA/Govt guarantee, or will the guarantor look through the super fund and see that my cash component is less than the guaranteed amount and so guarantee my cash component on deposit with the failed bank.

    Given the size of our super funds, and in particular the bank owned ones, this question is potentially critical to bank bondholders/term depositors not eleigible for any guarantee as it could materially affect their recovery rate in an insolvency.

    • I’ve rearranged the cash component of my super to different banks so that it is under the federal government guarantee.
      However I do have misgivings.

      I fear that our government will probably adhere to the Cyprus model and include depositors as unsecured creditors.
      Even if this were not pressed in this way, the government is the taxpayer, and as taxpayers we would slowly pay back our own deposits in increased taxation or inflation.

      No real guarantee at all.

  2. I don’t think this data tells us much. At least not in isolation.
    Growth in deposits is highly related to change in debt. (After all one person’s debt is another’s deposit.)
    It’s not households being prudent, it’s banks creating money.