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Press release of Banco de Portugal on the Retail Banking Markets Monitoring Report 2017

Today Banco de Portugal publishes the Retail Banking Markets Monitoring Report. The report presents developments in the deposit, mortgage credit and consumer credit markets in 2017.


Remuneration rates of term deposits continued to follow a downward trend

At the end of 2017 all simple term deposits were remunerated at a fixed interest rate, and the downward trend of the remuneration rates seen since 2012 was maintained. 

In 2017 the average gross nominal annual rate of deposits available to the general public declined in all maturities in comparison with 2016. 81.7% of the deposits available to the general public  at the end of 2017 had a gross nominal annual rate equal to or below 0.5% (72% in 2016) and 93.1% had a gross nominal annual rate equal to or below 1% (90.4% in 2016). 

79.6% of the simple term deposits traded in December 2017 were available in traditional channels and 20.4% only in digital channels. 83% of the simple term deposits available to the general public presented maturities of up to one year, in line with the previous year, and 62.3% of the total had minimum opening amounts of up to €500. Deposits available exclusively on digital channels had more frequently shorter maturities and lower minimum opening amounts than traditional channels.


Index-linked and dual deposits continued to fall as in the previous year, more markedly in the number of depositors

The market for index-linked and dual deposits decreased in 2017, maintaining the previous year's trend, with regard to the number of traded deposits, the amounts invested, and the number of depositors. 137 index-linked and dual deposits (23.5% less than in 2016) were traded by 11 credit institutions. In the same vein, around 103 thousand depositors invested €1,997.6 million in these types of deposit, accounting for declines of 36.5% and 43.7% respectively from the previous year.

At the end of 2017 the stock of funds invested in index-linked and dual deposits amounted to €7,432.3 million, i.e. 16.2% less than at the end of the previous year, leading to a decline in the share of index-linked and dual deposits in the total amount invested by private individuals in term deposits (from 9.2% in 2016 to 8.1% in 2017). The stock market continued to be the most frequent reference, reinforcing its weight vis-à-vis 2016.

More than half (56.1%) of the 141 index-linked deposits that matured in 2017 paid a remuneration rate below the gross nominal annual rate of simple term deposits traded by the same institution for the same maturity. 51.6% of the index-linked deposits that matured in 2017, of which 21.9% had a zero gross nominal annual rate, paid the minimum remuneration rate advertised in the respective prospectus. By contrast, 21.3% of these deposits paid the maximum gross nominal annual rate advertised in the prospectus.


The amount of mortgage credit granted rose by 40%

In 2017 and for the third consecutive year the mortgage credit market recorded significant increases in the number of agreements concluded and the amount of credit granted, although to a lesser extent than in previous years. 77,506 new mortgage credit agreements were concluded and €7.7 billion was granted, corresponding to 32.3% and 40% growth rates respectively from 2016. However, the overall amount of the mortgage credit portfolio as at 31 December 2017 declined to €87.7 billion (€89.2 billion as at the end of 2016), since the increase in the number of agreements was not sufficient to offset early repayments and agreements maturing in that year.

The average amount and the average maturity of new mortgage credit agreements went up in 2017 compared to the previous year. The average amount rose from €94,160 in 2016 to €99,670 in 2017. The average maturity of mortgage credit agreements concluded in 2017 was 33.3 years, i.e. six months more than in 2016.

The most frequent type of rate in mortgage credit agreements concluded in 2017 continued to be the variable interest rate (81.3%), although its relative importance fell in comparison with 2016 (83.7%). By contrast, the number of mixed rate agreements increased significantly (68.3% more than in 2016) to a share of 16.9% in 2017 (13.3% in 2016). Fixed interest rate agreements played a less important role, accounting for 1.8% of new agreements, compared to 3% in 2016.

12-month Euribor was the most-used index (92.5% compared to 85.2% in 2016). The average spread in new mortgage credit agreements at variable interest rate declined in 2017, to stand at 1.74 percentage point (0.25 percentage points less than in 2016). This reinforced the downward trend observed since 2015, with the spread reaching a similar level to that of the agreements concluded in 2010 still in portfolio.

Last year there were 72,463 total early repayments in mortgage credit agreements, which amounted to €3.9 billion, i.e. 25.5% and 35% more respectively than in 2016. 


The consumer credit market continued to grow, boosted by car loans

In 2017 the amount of consumer credit continued on the upward path seen since 2013. There was a 12% increase from the previous year, albeit still lower than observed in 2016 (17.5%) and 2015 (23%). The number of credit agreements concluded rose by 5%, an increase lower than that observed in 2016 (6.5%) and 2015 (7.8%). In 2017 the number of agreements concluded exceeded for the first time the value recorded in 2010, the year preceding the contraction in the consumer credit market.

The increase in the amount of credit granted was widespread across the three types of credit, although car loans recorded the highest increase (20.4% more than in 2016). Personal credit grew by 8.4% from 2016, and revolving credit increased less considerably (2.2%). Average maturities for personal credit and car loans rose to 4.4 years and 6.7 years (two months and five months more respectively).

Given that car loans were granted especially through points of sale and by specialised institutions, the weight of this trading channel and type of institution increased.

The cost of credit continued to decrease in 2017. The average annual percentage rate of charge (APRC) in the market went down by 0.6 percentage point between the fourth quarter of 2016 and the fourth quarter of 2017. In 2017 the APRC decreased across all types of credit compared to 2016, most markedly in revolving credit (-0.9 percentage point).