Issue No. 9/2009
September 2009
Monetary statistics for September 2009 issued by the Central Bank of Malta show that the Maltese contribution to the euro area broad money stock (M3) contracted by EUR86.8 million compared to August, reaching EUR8.5 billion. As a result, the annual rate of growth of the Maltese contribution to euro area M3 fell to -2.4% from -1.2% in August.
The narrow money (M1) component of the Maltese contribution declined by EUR33.7 million, or 0.8%, during the month, driven by a fall in overnight deposits. These dropped by EUR30.6 million, or 0.9%, mostly on account of lower balances belonging to resident insurance companies. Overnight deposits belonging to other euro area residents also fell, though to a lesser extent. Meanwhile, currency issued dipped by EUR3.1 million, or 0.5%. As a result, the annual rate of growth of M1 slowed down to 8.0% from 8.6% in August.
The decline in M1 and a drop in short-term deposits led to the fall of EUR53.1 million, or 0.6%, in the intermediate money (M2) component, in September. Indeed, deposits with an agreed maturity of up to two years fell by EUR18.4 million, or 0.4%, as a considerable decline in holdings belonging to resident non-bank financial intermediaries and households was only partly offset by higher balances belonging to private non-financial companies resident in the rest of the euro area. As a result, the annual rate of growth of deposits with an agreed maturity of up to two years belonging to Maltese residents fell further, to -12.3% in September, compared with -9.3% in August. Deposits redeemable at up to three months’ notice declined marginally during the month.
Resident banks’ liabilities in the form of short-term debt securities, less their holdings of similar securities issued by other MFIs elsewhere in the euro area, also form part of M3. During the month, Maltese MFIs’ net holdings of such short-term debt securities increased by EUR33.7 million. Thus, they had a negative impact on the Maltese contribution to euro area M3 in September.
In aggregate, deposits included in M3 belonging to local residents fell by EUR103.0 million in September. The drop may reflect the issue, during the month, of corporate bonds, which offered an alternative investment product to savers. Consequently, their annual growth rate remained negative, falling to -3.1% from -0.8% in August.
Credit to residents of Malta expanded by EUR47.1 million in September, with the increase being due to borrowing by residents other than the general government. Credit to this category rose by EUR91.4 million, or 1.2%, with interest charges on outstanding borrowings accounting for part of the increase. From a sectoral perspective, lending to the wholesale & retail trade sector, to households for the financing of house purchases and to the real estate, renting & business activities sector all rose significantly. In contrast, credit to the Maltese general government contracted by EUR44.3 million, or 2.3%, as a drop in banks’ holdings of Malta Government Stocks was only partly offset by a rise in their Treasury bill portfolio. Thus, the annual rate of growth of credit to Maltese residents slowed down to 11.1% in September from 11.9% in August.
However, credit to residents of other euro area member states increased by EUR229.5 million over the month. As a result, total credit to euro area residents went up by EUR276.7 million in September.
The external counterpart of M3, which reflects transactions between banks resident in Malta and non-euro area residents, declined by EUR56.5 million, or 0.8%, in September. This was because claims on non-residents of the euro area dropped by EUR487.5 million, mainly reflecting lower loans granted to the non-bank private sector outside the euro area and a reduction in holdings of deposits with non-euro area banks. At the same time, liabilities to non-residents of the euro area fell by less, shedding EUR431.0 million as loans taken up by resident banks and time deposits belonging to private non-financial companies decreased.
The ‘other’ counterparts of M3, reflecting mainly interbank transactions across the euro area, increased by EUR307.0 million, or 2.9%, in September as other net liabilities rose considerably due to a sharp drop in claims on other banks in the euro area. However, a rise in longer-term financial liabilities in the form of retained earnings and reserves also contributed significantly.
During the month, the weighted average interest rate applied by resident credit institutions to customer deposits decreased by 5 basis points to 1.62%, while the weighted average interest rate charged on loans remained unchanged for the third consecutive month at 4.48%.
Malti
View Table - Contribution of Resident MFIs to Euro Area Monetary Aggregates and Selected Counterparts
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