A booklet that pays more?  Not right away... - Trends-Tendances sur PC

A booklet that pays more? Not right away… – Trends-Tendances sur PC

The ECB may have raised its rates twice in less than two months, but savers are still waiting to see their savings better remunerated.

No one escapes the crisis. The war in Ukraine makes life more expensive. Gas and electricity bills, shopping at the supermarket, plane tickets, apartments for rent: everything goes up. Except the rate on regulated deposit books. In almost all banks, it remains invariably fixed at 0.11%, including the loyalty bonus. A grotesque rate that makes the saver the big loser in the current crisis. With inflation above 9%, he loses almost 10% of the purchasing power of his savings in one year.

No one escapes the crisis. The war in Ukraine makes life more expensive. Gas and electricity bills, shopping at the supermarket, plane tickets, apartments for rent: everything goes up. Except the rate on regulated deposit books. In almost all banks, it remains invariably fixed at 0.11%, including the loyalty bonus. A grotesque rate that makes the saver the big loser in the current crisis. With inflation above 9%, he loses almost 10% of the purchasing power of his savings in one year. The worst is that no upward movement is to be expected in the coming weeks. The four main banks (BNP Paribas Fortis, Belfius, KBC and ING) are not currently planning to increase the rate on the regulated savings account. Asked about the subject on the sidelines of the presentation of the bank’s (very good) results for the first half, Max Jadot, CEO of BNP Paribas Fortis, recently indicated that it was “too early” to comment on a possible increase. savings account rates. At the beginning of August, his counterpart Marc Raisière, the boss of Belfius, had even advanced that, according to him, no change should be expected by the end of the year. It’s clear, our bankers are in no hurry to better remunerate savings books whose outstanding amount, let’s remember, amounts to 300 billion euros. Why? However, the situation today is totally different from what it has been for many years. The financial planet that is walking on its head, with negative rates, it’s over! To combat the rise in prices, the ECB has indeed decided to strongly activate the lever of the cost of money. After raising its rates by 0.50% in July, it has just raised them by 0.75%. Two successive increases in the space of barely two months which have brought its deposit rate back into positive territory to set it at 1.25%. “As long as the ECB’s rates were negative, it was logical that the remuneration on the deposit books should remain so low, indicates Eric Dor, director of economic studies at the IESEG School of Management (Lille). With key rates now at 1.25%, there is now room for a higher rate on the savings account.” Forgotten, in fact, the penalty of – 0.5% levied on excess liquidity. Investing money with the Frankfurt institution has again become attractive for our bankers. Even taking into account bank taxes which are used in particular to finance the public guarantee on deposits, they are no longer in the red. In addition to the 0.11% to be paid to savers, the banks indeed pay roughly 0.30% in bank taxes (see the box “The State receives more than the saver”). It is only when the ECB rate is above 0.41% (0.30% + 0.11%) that banks no longer lose money on the excess savings of their clients. This is the case now, given that the remuneration obtained on the account of the ECB has again become largely positive, amounting today to 1.25%. The best proof of this is that since September 1, ING Belgium no longer sets maximum amounts on regulated savings accounts and ceases to apply a negative interest rate on deposits of more than 250,000 euros. Like the other market players, the Belgian subsidiary of the Dutch banking group has also eliminated the negative rates it imposed on certain categories of professional customers. It is that “the situation is only improving for banks in Belgium, observes Eric Dor. Whether for long-term loans such as mortgage loans or for shorter-term loans intended for SMEs and self-employed, rates are now up across the full range of their loans.” Evidenced by the strong results for the first half published in recent weeks: three billion for the four main banks. The interest margin, that is to say the difference between the rate they charge the customers to whom they grant loans and the interest they pay to those who deposit money with them, is good. Thus, BNP Paribas Fortis reported a net increase in its interest income of more than 11% over the first half as a whole. Same trend on the side of KBC (and CBC) where they jumped 14% in the second quarter compared to the same period a year earlier, while Belfius also recorded higher interest income. And it’s not over. Christine Lagarde, the president of the ECB, believes that with key rates now at 1.25%, we are still “very far from a level that will help bring inflation down to 2%”. There will be, she adds, other rate hikes in the future. Again, this is good news for banks in the euro zone. All you have to do to convince yourself of this is to turn to KBC. The day after the ECB’s announcement, on September 8, its share price gained 5% in one session. It is that “even without making an effort, it is now possible to make a margin by redepositing savers’ money with the ECB,” adds Eric Dor. And then, all the studies indeed show that over a long period, a rise in interest rates increases banks’ net interest income.” The first effect of the current increase in the price of money and that programmed by the ECB will be to allow banks to lend more expensively with (even) higher margins, which in the medium to long term will increase their income. Especially since the improvement goes further. A new calculation rule will indeed apply to the TLTRO rate (for Targeted Longer Term Refinancing Operations, that is to say loans granted by the ECB at a favorable rate that can fall to -1%). “If the rate of these advantageous loans will gradually rise, it should a priori remain well below the new deposit rate. Thus, the banks could continue to place their TLTROs in their account at the ECB”, explains Eric Dor, who calculated that they could earn up to 28 billion euros. But despite this comfortable situation, caution is still in order. Why, exactly, is the possibility of converting higher interest rates into better rates for savers so long overdue? Firstly because Finance Minister Vincent Van Peteghem wants to increase the deposit guarantee fund by 1.4 billion euros, much to the chagrin of bankers. Then because “the energy crisis and the prospect of recession raise fears of an increase in the cost of risk and bad credit. Suffocated by their energy bills, more households and more companies are at risk of defaulting on their bank loans Banks are therefore faced with increased default risks”, underlines Eric Dor. In this context of uncertainty, BNP Paribas Fortis therefore argues that “the bank’s commercial policy is not determined by the rise or fall of the ECB’s short-term interest rates, and that “of other elements come into play”. Same story on the side of ING where “any decision on a possible adjustment of our interest rates is the result of a detailed process in which we take into account many factors” , such as market interest rates but also “legislation, market conditions, our competitive position and trends in our customers’ savings habits and preferences.” For its part, KBC does not rule out the possibility of a rise in savings rates, but specifies that it is “primarily a commercial decision”, without deciding on a date. In short, “the rate of the booklet will end up increasing a day, says Eric Dor. By the end of the year, early next year? It’s the game of competition that will decide. The only question is who will initiate the momentum and when it will be initiated. Afterwards, the others will follow suit.”

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