At year-end 2019, Dutch banks held EUR 368 billion in household savings, up roughly EUR 13 billion, or 3.5%, on the previous year. The largest portion of the increase is attributable to higher net deposits, which reached EUR 12 billion in 2019. At EUR 1.2 billion, credited interest made the lowest contribution in many years.
The annual increase in savings was substantially greater in 2019 than in the 2013-2016 period, but comparable with that in 2009-2012. That said, a larger proportion of the increase was driven by net deposits in 2019 compared with credited interest (see the figure below).
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Annual net deposits reached a level not seen since 2009, when they stood at EUR 14 billion. Growth in net income is one of the factors in this. A further explanation for the increase in net savings despite low interest rates is the savings goal effect: at lower interest rates more savings are needed to achieve the same target amount. The precautionary saving motive also offers a possible explanation, whereby households save more in response to uncertainty regarding the economy or their own financial situation.
In contrast with net deposits, credited interest fell to EUR 1.2 billion in 2019, from EUR 1.4 billion in 2018, continuing the trend observed since 2012. Average interest rates on fixed-term deposits and instant access savings accounts stood at 0.37% at year-end 2019, down 9 basis points on 2018.
Of the EUR 368 billion in savings, EUR 313 billion (85%) was held in instant access savings accounts. The remaining EUR 55 billion was held in fixed-term deposits, including home construction accounts and accounts linked to savings-based mortgages and employee savings schemes.
Net deposits in instant access savings accounts were higher in 2019 than in 2018, at EUR 11.4 billion against EUR 4.5 billion. In contrast, households made lower net additions to fixed-term deposits, at EUR 0.8 billion against EUR 1.1 billion. They may find that the current low rates offered on fixed-term deposits do not compensate for reduced flexibility and are not worth the trouble of moving funds from one account to another. This is also evidenced by the increase in households’ on-demand balances held in payment accounts. These stood at EUR 77 billion in December 2019, up 13% from EUR 68 billion a year earlier.
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