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Press Release of Banco de Portugal on the Retail Banking Markets Monitoring Report 2016

Today Banco de Portugal publishes the Retail Banking Markets Monitoring Report. The report presents developments in the deposit and credit markets in 2016.

 

Remuneration rates of term deposits declined in most maturities.

At the end of 2016, all simple term deposits were traded at a fixed rate. The remuneration rates declined in most maturities. Approximately 90% of the term deposits available to the general public had a gross nominal annual rate equal to or below 1% (86% in 2015); that rate was below 0.5% in 72% of the deposits traded (57% in 2015).

The offering continued to focus on shorter maturities: 83.5% of deposits traded in 2016 had maturities equal to or below one year (84% in 2015).

At the end of 2016, 67 deposits were being traded exclusively through digital channels (homebanking and mobile apps), totalling 19.9% of the offering of simple term deposits (23.3% in 2015).

The conditions for the opening and early withdrawal of simple term deposits were more flexible than in 2015. The share of deposits with minimum opening amount up to €500 increased, as well as the percentage of deposits enabling the early withdrawal of funds with partial interest penalisation.
 

The market of index-linked and dual deposits decreased for the first time since 2012.

In 2016, the market of index-linked and dual deposits reversed the upward trend observed since 2012. In the course of the year, €3,143.5 million was invested in these products by 183,000 depositors, reflecting declines of 42.9% and 42.5% from the previous year. At the end of the year, the market for index-linked and dual deposits totalled €8,865.7 million, 14.8% less than in 2015. The share of these deposits in the term deposit market declined also from 10.2% in 2015 to 9.2% in 2016.

Of the 197 maturing index-linked deposits, 28.4% paid a remuneration rate exceeding the interest rate of simple term deposits traded in the same institution for the same maturity (42% in 2015). The minimum remuneration rate advertised in the prospectus was paid in 144 index-linked deposits and the maximum rate in 17 deposits. The remuneration was zero in 63 index-linked deposits.
 

New mortgage credit continued to grow and its cost declined. Early repayments and maturing deposits exceeded the amount of new credit. 

In 2016, 57,912 mortgage credit contracts were entered into, totalling €5.5 billion. The number of new contracts and the amount of credit granted increased by 34.2% and 39.6% respectively in 2016, after growth of 51% and 65% in 2015.

The amount of new contracts, however, was lower than early repayments and maturing deposits, resulting in a decline in the overall amount of the mortgage credit portfolio from €90.5 billion at the end of 2015 to €88.4 billion at the end of 2016. In 2016 early repayments in mortgage credit contracts amounted to €3.2 billion, 45.4% more than in the previous year.

In 2016 the average amount of new mortgage credit contracts increased (4%), as well as the average maturity agreed (from 32.1 to 32.8 years). Most contracts (83.4%) continued to include a variable interest rate, although the prevalence of this type of interest rate has declined (89.5% in 2015). 12-month Euribor was the most-used index, thus surpassing 6-month Euribor, the index most frequently used in 2015.

The average spread in variable-rate contracts declined by 33 basis points to 1.98 percentage points.

The renegotiation of mortgage credit increased by 6.9%. In the course of the year, there were 31,000 renegotiations, relating to approximately 28,000 contracts; 11% of the renegotiated contracts were in default.
 

New consumer credit has continued the increase observed since 2013. 

The amount of new consumer credit rose by 17.5%, continuing the increase observed since 2013 and exceeding the values recorded in 2010. In 2016, on average, €497.4 million was granted and 119,500 new contracts were entered into every month.

The rise in the amount of credit granted was accompanied by a decline in the cost of credit. In the last quarter of 2016, the average annual percentage rate of charge (APRC) in the market stood at 11.3% per cent, 0.6 percentage points less than in the same period of 2015.

The amount of credit granted rose in the three consumer credit segments, but the increase was again more significant in car loans (27.1%) than in personal credit (16.1%) and revolving credit (3.6%). The cost of credit declined also in all segments, but more markedly in revolving credit.