Household deposit flows slowed to a trickle in January, setting the stage for a battle for funding if the trend continues.
According to latest APRA banking data, total household deposit balances increased by just 10 basis points in January – an annualised rate of 1.2 per cent.
This is a sharp drop from the 9 per cent-plus growth rate over the past couple of years and, if it continues, presents a challenge to banks that have come to rely more heavily on deposits for their funding.
APRA figures show that a number of deposit takers suffered outflows in January and some that have been losing deposits over the three months to January. These include Arab Bank, Australian Unity Bank, Bendigo and Adelaide Bank, Bank of Sydney, Northern Inland Credit Union, Defence Bank, Greater Bank and IMB Bank.
In its analysis of the data, Macquarie Securities said: “After a period of unprecedented low-cost deposit growth during COVID, transaction deposits started to decline in the first half of 2022/23.”
Macquarie said the flows that are still going into deposits are headed for savings accounts and terms deposits with higher rates.
According to the latest Mozo Banking Roundup there were some outsized increases in at-call rates in February. Among them, ANZ increased the ongoing bonus rate on its Progress Saver by 100 bps to 3.5 per cent.
CBA increased the ongoing bonus rate on its GoalSaver account by 75 bps to 4 per cent.
APRA data shows ANZ suffered deposit outflow in January and CBA had no growth.
Other deposit takers that made outsized at-call rate increases include Great Southern Bank, NAB and Newcastle Permanent. Judo Bank increased term deposit rates by up to 40 bps.
The top at-call rates in the market include Bank of Queensland’s ongoing bonus rate of 4.9 per cent on its Future Saver account (account holders must be under 35) and ING Bank’s ongoing bonus rate of 4.8 per cent on Savings Maximiser.
Rabobank is offering a four-month introductory rate of 4.75 per cent on its High Interest Savings Account and Police Bank is offering a base rate of 4.25 per cent on its Super Charge account.
In the TD market, the top rate for terms under 12 months is 4.25, which Teachers Mutual Bank is offering.
Judo Bank is the rate leader for all terms between 12 months and five years, offering 4.45 per cent for 12 months and 4.95 per cent for five years.