In January, deposits belonging to residents of Malta and held with resident monetary financial institutions (MFI) expanded by €220.6 million, or 2.3%.

Consequently, the annual growth rate rose to 10.1%, from 8.8% in the previous month.  Growth in deposits stemmed mainly from a rise in overnight deposits, which put on €147.7 million, or 2.6%. This was driven, to a large extent, by higher balances belonging to households, non-financial corporations (NFC) and non-bank financial intermediaries. As a result, the annual growth rate of overnight deposits accelerated to 16.2% from 14.3% in December.

Deposits with an agreed maturity of up to two years also expanded, rising by €72.5 million, or 1.9%, mostly due to higher balances belonging to households and, to a lesser extent, non-bank financial intermediaries. Consequently, the annual growth rate of these deposits rose to 3.5%, from 2.7% a month earlier. At the same time, deposits redeemable at notice of up to three months edged up by €0.4 million, or 0.3%.

 Credit extended to Maltese residents

 

In January, credit granted by resident MFIs to Maltese residents rose by €46.8 million, or 0.4%, on the back of an increase in credit to general government.

Nonetheless, the annual growth rate slowed down further to 0.7%, from 1.4% in December.

Credit to general government expanded by €74.5 million, or 3%, reflecting a rise in banks’ holdings of Treasury bills and Malta Government Stocks. However, the annual growth rate of credit to general government slowed down to 5.4% from 8.3% in December.

 On the other hand, credit to other residents (i.e., all other sectors excluding the general Government) contracted by €27.7 million, or 0.3%. The decline stemmed mainly from a drop in loans granted to private NFCs, particularly those operating in the wholesale & retail trade and in the information & communication sector. Loans to   the construction sector also fell moderately during the month. In contrast, credit to households continued on an upward trend following an increase in loans for house purchase. Year-on-year, credit to other residents contracted by 0.6% in January, following a 0.4% drop in December.

 Net foreign assets of Maltese MFIs

 Net foreign assets belonging to resident MFIs contracted by €24.4 million, or 0.3%, as a substantial increase in foreign liabilities exceeded a rise in foreign assets. The rise in the latter stemmed mainly from increases in deposits held with foreign MFIs and in securities’ holdings. On the other hand, the rise in foreign liabilities mainly reflected higher borrowing from foreign banks as well as growth in non-residents’ deposits with resident banks. Net foreign assets contracted by 21.0% in the year to January, after a fall of 21.2% in the twelve months to December.

 Bank lending and deposit rates

In January, the weighted average interest rate paid by MFIs on all deposits belonging to resident households and NFCs fell by 4 basis points to 1.37%. Meanwhile, the weighted average interest charged by resident MFIs on outstanding loans to resident households and NFCs fell by 3 basis points to 4.21%.

The weighted average deposit rate was 6 basis points lower when compared to a year earlier, while that charged on loans was 13 basis points lower.

 Contribution to euro area monetary aggregates

The contribution of resident MFIs to the euro area broad money stock (M3) expanded by €247.8 million, or 2.1%, in January reaching €11.9 billion. Consequently, its annual growth rate accelerated to 13.7%, from 11.2% one month earlier.

 Movements in M3 were mainly driven by developments in the intermediate money component (M2). The latter rose by €241.0 million, or 2.1%, on the previous month.

Narrow money (M1), which forms part of M2, grew by €169.1 million, or 2.5%, during the month because of an increase in overnight deposits. The latter expanded by €173.6 million, or 2.9%, driven by higher balances belonging to all depositor groups.

On the other hand, currency issued fell marginally when compared to the previous month. Hence, the annual growth rate of M1 rose to 14.9% in January, from 13.2% in December.

 Deposits with an agreed maturity of up to two years, which also form part of M2, went up by €71.5 million, or 1.5%, almost entirely because of higher balances belonging to Maltese households and non-bank financial intermediaries.

 Marketable instruments, the remaining component of M3, rose by €6.8 million, or 4.1%, on the back of higher Money Market Fund (MMF) shares issued.