Average savings of bank customers is HUF 1.2 million
The National Deposit Insurance Fund (NDIF) evaluated the data of credit institutions’ fee returns for the year 2011. According to the fee returns based on last year’s closing balance, the savings portfolio in the banking sector decreased for the first time last year after 18 years of steady growth (by 1.8 percent), which as a result reached HUF 16,640 billion. Concurrently, the NDIF’s indemnification obligations increased by 12 percent to HUF 8,495 billion. 99.6 percent of depositors are within the protection limit of EUR 100,000 (nearly HUF 27 million) valid as of 1 January for deposit insurance.
The HUF 16,640 billion total savings deposited with credit institutions as of early 2011 – based on fee returns as of June in the current year – has shown a decrease for the first time since 1993 (by approximately HUF 300 billion) in comparison with the previous year’s figure.
The insured deposit portfolio, which constitutes the fee base of the NDIF, grew by 0.2 percent, from HUF 12,174 billion of early 2010 to approximately HUF 12,204 billion.
Consolidated Insured Deposits data: majority of depositors protected
In their fee returns, NDIF member institutions are to present a statement consolidated by customer according to the Consolidated Insured Deposits data register. What can be established due to this is that in early 2011, the deposits of 9,835,004 out of the 9,874,221 deposit owners did not exceed the EUR 100,000 (nearly HUF 27 million) limit of currently valid deposit insurance protection, i.e. 99.6 percent of all depositors enjoy the NDIF’s protection.
Considering the EUR 100,000 limit, 69.6 percent (HUF 8,495 billion) of the insured deposits worth HUF 12,204 billion, which constitutes the basis of the NDIF’s fee base, is below the NDIF’s indemnification obligation.
Large depositors in a limited circle
Despite the relatively small number of large depositors holding deposits above the NDIF’s protected limit of EUR 100,000 (39,217 depositors, i.e. 0.4 percent of all depositors), these deposits collectively are worth HUF 4,802 billion. Based on this, the average deposit size of large depositors in the banking system (above the protection limit of the NDIF) is HUF 122.4 million.
The average deposit amount per person is HUF 1.236 million. The average amount of insured deposits decreased from HUF 294 thousand to HUF 262 thousand. The average deposit amount of bank depositors is HUF 852 thousand. The average deposit amount of depositors in savings cooperatives is slightly less, i.e. HUF 662 thousand.
The interesting point about the data series is that in the credit cooperative sector, which has a share as little as 0.09 percent within the savings portfolio of the sector, the average deposit per person is the highest at HUF 1.9 million, which is more than twice the average deposit in banks.
Increasing market share of cooperatives
91.4 percent of savings is deposited in the bank and housing savings bank sectors, while 8.6 percent in the cooperative sector, with a slight growth seen in the latter since 2008.
Significant increase in the NDIF’s indemnification obligation
Within a year, the NDIF’s indemnification obligation grew by 12 percent to HUF 8,495 billion, which is caused by the new limit of indemnification at EUR 100,000, which came into effect on 1 January. The indemnification obligations of the NDIF have shown a continuously growing tendency since 2000.
Fee payment and coverage of compensation for assets
The assets available for compensating depositors (HUF 88 billion as of the beginning of 2011) in an event of a credit institution’s insolvency come from two main sources of income: from the deposit insurance fees paid by member institutions in the relevant year, on the one hand, and from the yields of the accumulated fees invested in government securities.
The average rate of the deposit insurance fee decreased considerably between 2000 and 2004, and then stagnated for three years. In 2008, it dropped to a half in comparison with the previous year, and had a uniform rate of 0,2 per mill from 2009 on. From 2011 – due to the fact that the indemnification limit hiked to double the previous amount at EUR 100,000 – the NDIF’s Board of Directors determined the rate at 0,6 per mill. As a result, the deposit insurance fee paid by credit institutions grew to three times the previous year’s figure.
For an indemnification obligation of each HUF 1,000 towards credit institutions, the average fee in 2011 amounts to HUF 0.86.
NDIF’s coverage ratio decreases
Due to the more dynamic hike in obligations compared to the NDIF’s assets available for compensation, which has grown to HUF 88 billion, the coverage indicator of deposit insurance has dropped to 1.04 percent, as opposed to the previous year.
Composition of savings
Continuing a tendency of years, the weight of savings deposits keeps on declining. Decreased interest accruals are also caused by the new deposit products available on the market and by diminishing interest rates.
Since deposit insurance has been based on market economy since 1993 (foundation of the NDIF), the state guaranteed deposit portfolio has considerably decreased. At nominal value, fully state guaranteed deposits dropped from the closing balance of HUF 608 billion of 1993 to HUF 69 billion by early 2011.
To the attention of the editor:
Bank deposits with credit institutions registered in the territory of the EU are insured by a national deposit insurance institution established in the country of foundation. Since 1993, all credit institutions holding an operating licence in Hungary (banks, savings cooperatives, credit cooperatives, home savings banks) are required to join the NDIF, and to pay an accession fee and an annual fee. The key function of the NDIF, which promotes stability in the domestic banking system, is to fund indemnification of depositors from its accumulated assets in the event deposits are frozen.
For the valid rules of deposit insurance, please visit the home page of the NDIF (www.oba.hu), and download the customer information brochure publication “Compass to deposit insurance”.
In the event a credit institution is closed (in everyday terms: goes bankrupt), the NDIF refunds depositors eligible for indemnification within 20 working days, aggregated by person and by credit institution, up to a limit of EUR 100,000 (approximately HUF 27 million). The compensation, which is always paid in HUF, applies to frozen deposits and interests alike.
NDIF fee return
Until 20 June each year, NDIF member institutions produce a fee return based on the previous year’s balance sheet data, which contains their total deposit portfolio and the relevant NDIF membership fee payable, as well as Consolidated Insured Depositors data.
Consolidated Insured Depositor data
The Consolidated Insured Depositor data are an important indicator for credit institution customers, which shows the final amount of an individual customer’s savings under NDIF protection in a given bank, with regard to the limit of indemnification, i.e. shows the indemnification amount that would be payable by the NDIF to the customer at a certain point in time. This figure has been accessible by customers concerned in any bank branch since the beginning of 2011, at the customer’s request.
NDIF member institutions
In 2011, deposit insurance fee returns were filed by 169 member institutions, of which 2 are home savings banks, 4 credit cooperatives, 32 banks and 131 savings cooperatives.