Deposits of citizens in banks in Bosnia and Herzegovina (BiH)reached 18.88 billion BAM at the end of September this year, which is 1.94 billion BAM more than in the same period last year. According to economists, the growth in savings is a result of the lack of favorable investment opportunities, but also of a sense of uncertainty, which leads citizens to continue seeing security in money kept in bank accounts.
On the occasion of World Savings Day, celebrated on October 31st, the Central Bank of BiH (CBBiH) emphasized that citizens increasingly recognize the importance of saving and have trust in the stability of the domestic currency and the banking sector. The continuous growth of citizen deposits, as they noted, contributes to the stability of the financial system and enables banks to sustainably finance the economy and households.
According to the latest data from CBBiH, citizen deposits make up 52.1 percent of total deposits in the banking sector and represent a key foundation for financing and the stable functioning of banks.
“Term and savings deposits amounted to 5.65 billion BAM, which is 29.9 percent of total deposits, with an annual growth of 6.5 percent. Demand deposits reached 3.85 billion BAM, with a growth of 6.1 percent, while transaction accounts amount to 9.38 billion BAM, accounting for 49.7 percent of total deposits, with an increase of 17.3 percent compared to the previous year,” CBBiH reported.
The CBBiH analysis states that deposits in domestic currency total 11.13 billion BAM, representing 58.9 percent of total deposits, while deposits in euros and in BAM with a euro-linked clause amount to 7.03 billion BAM, or 37.2 percent.
“Deposits in other foreign currencies account for 724 million BAM, or 3.8 percent,” the CBBiH added.
Economist Zoran Pavlovic said that the increase in citizen savings in BiH reflects the specific economic and social circumstances in which we live.
“Our people, due to historical memories of insecurity from the war until today, are used to seeing the only security in the money they have in their accounts. When they do not have opportunities for serious investments, they keep money ‘just in case.’ There are also those who came into money easily and do not know what to do with it, so they also keep it as a deposit,” Pavlovic said.
He emphasized that this phenomenon is both good and bad. It is good for the banking sector, he said, because banks use domestic deposit money and do not have to borrow from parent institutions abroad, but it is bad for the economy because money is not directed into productive and profitable activities.
“The potential for investment exists, but it is hindered by uncertainty. Until the war in Ukraine ends, the political situation in Europe stabilizes, and the local environment improves, people will prefer to keep money rather than invest it. Therefore, it can be expected that savings will continue to grow, perhaps somewhat more slowly than before, but without significant investment in the economy,” Pavlovic emphasized.
