Low interest on deposits? “Look at Certificates of Savings”, says Totta’s leader

If deposit interest rates are low, there are savings alternatives for Portuguese families, said Pedro Castro e Almeida this Thursday at the presentation of Santander Totta’s annual results. “Look at Certificates of Savings,” said the CEO of Sant ander Totta, which is already feeling some flight of deposits to the hottest of the state savings products at this time.

Castro e Almeida explained that the rise in interest rates was so sudden that it is normal that it takes time to be reflected in an increase in the remuneration of deposits. “Rates went up very suddenly. It is perfectly normal that we are now starting to see a rise in the interest on deposits,” he assured.

And he even gave an example with the price of newspapers. “The price of paper fell in two months and I still haven’t seen this reflected in the price of the newspaper,” he said, considering it normal to have a period for the market to adjust.

The manager also pointed out that there is an excess of liquidity in the banking system. For example, the transformation ratio (deposits / loans) is at 80%. “Caixa, which has the largest share of deposits, is the bank with the most liquidity in Europe,” he said.

But are there alternatives in Portugal for Portuguese families’ savings? “There are. Look at Savings Certificates. The Portuguese saved seven billion last year [in savings certificates ], and 1.9 billion in December alone”, Castro e Almeida explained.

In fact, banks are already feeling the competition from certificates. “The reductions in deposits that we have had have two destinations: to repay mortgages and the second outlet is Saving Certificates,” he said. In relation to early repayments of credit, Santander registers an increase of 30% in recent months, compared to what was usual.

Santander Totta recorded profits of 568.5 million euros in 2022, an increase of 90% over the previous year, the institution announced this Thursday.