Surge in Savings: Bank Deposits Experience Growth in Recent Months

In recent months, the dynamics of savings in banks has experienced a boost, in contrast to what was observed during last year, when falls or moderate growth were recorded.

According to the most recent data provided by the Superintendency of Banks, bank deposits have reached a total of G. 142.1 billion until August. This represents an increase of 13.35% compared to August 2022, exceeding the growth rate observed in new loan placements. Although loans continue to increase, the growth rate is lower than that of savings collection.

Diego Duarte, manager of the Sudameris bank, told MarketData that these results could be explained by the better macroeconomic conditions and the economic activity driven by agriculture and binationals, which generated a more favorable context for both loans and deposits.

Duarte pointed out that, despite the reductions in interest rates made by the Central Bank of Paraguay (BCP) in the last two months, these have not yet reached a significant level nor have they had an immediate impact on the average interest threshold. . Therefore, he still considers the rates available to savers attractive.

The manager also clarified that, although the BCP continues to reduce its rates, the transmission mechanism of monetary policy is not instantaneous due to the lag in its effectiveness.

«Today, passive rates on deposits are being adjusted and remain at reasonable levels, which is interesting for citizens in general. This, added to the dynamism that we are observing in the economy and the constant confidence in the financial system, means that deposits continue to increase,” said Duarte.

It is relevant to mention that passive interest rates as of July stand at 5.23%. By instrument, it is observed that Term Deposit Certificates (CDA) have a rate of 9.15%, time deposits have 6.15%, and demand deposits have 0.75%.

Accounts opening

For his part, the president of Banco Familiar, Alberto Acosta, maintained that the growth of banks’ passive accounts has been driven by the attractiveness of the Paraguayan Payment System (SIPAP) and the Instant Payment System (SPI), which which has resulted in a significant increase in account openings. However, he warned that this trend has not generated similar profitability for financial entities.

«The growth has been very great in terms of raising money, since to use the SIPAP, you must first deposit your money. This has led to an explosion in the opening of accounts and, at this moment, passive accounts outnumber credits,” said the banking executive.

On the other hand, Acosta indicated that the challenge for banks lies in making these operations profitable, since they practically do not generate income, and the banks’ profitability comes mainly from loans.

«The three functions of banks are to collect money, mobilize it and finally lend it. Today, the only source of income for banks is credit,” he pointed out.

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For his part, the president of BCP, Carlos Carvallo, pointed out that the growth between both portfolios is practically synchronized, but slightly in favor of deposits. However, he highlighted the solidity and recovery that the financial system has experienced in regards to deposits.

Regarding loans, Carvallo indicated that the prospects are encouraging, since there are several attractive financial products for financing in which the financial system is preparing to play a leading role.

In relation to interest rates and possible reductions in the deposit rate after the decrease in monetary policy, Carvallo stated that this is in an initial phase and that he does not believe it will discourage savings in financial instruments.

“We are in the first steps of a rate reduction process, and although they have been reduced, the monetary policy rate is still very initial,” he explained.

In addition, he ruled out that monetary policy is or will be an obstacle to the development of the real economy. “We do not see that monetary policy is an impediment to the real sector of the economy, which continues to grow at high rates,” highlighted the president of the BCP.