Spaniards are tired of deposits and are speeding up the transfer of money from their accounts to investment funds

Spanish savers have accelerated the transfer of their savings from bank accounts to funds . The financial reports of the six listed banks show that clients' money in investment products has grown by 15.1% in the last year, while deposits have barely increased by 3.4%. This movement reflects a change in trend, largely driven by the monetary policy of the European Central Bank (ECB) which has left a shortage of attractive offers in the deposit market, one of the star products among the Spanish public.

Last year, deposits represented 72.6% of the total money that savers held in deposits and funds in the six major Spanish banks (Santander, BBVA, CaixaBank, Sabadell, Bankinter and Unicaja), while investment funds accounted for only 27.4%. However, the trend has begun to change. In an environment of falling interest rates, the profitability of deposits has decreased, which has led many savers to look for alternatives with better return expectations. In the last year, 70% of savings are in deposits and investment funds now represent 30%.

In absolute terms, the growth in deposits is almost 40 billion euros, while in investment products it is more than 66 billion. In any case, it must also be taken into account that 2024 has been a great year for the markets, with high gains in equities, especially assets linked to the United States and its main index, the S&P 500 , thanks to the furor unleashed by the power of artificial intelligence, so that portfolios have been revalued. According to data from the employers' association Inverco, the profitability of funds in Spain in 2024 was 6.9%. Taking these figures into account, the growth in contributions to investment products of the six major banks would be 8.2%.

By entity, the growth of Bankinter is particularly noteworthy, with 22% more investment products, although deposits have also grown by 8.2%. Santander Spain has increased the volume of money its clients have in funds by 20%. Curiously, it is the only bank that has reduced the volume of deposits (-0.8%) compared to last year, which indicates a greater transfer of money from savings accounts and term deposits to investments. CaixaBank (+13.8%), Sabadell (+13.8%) and BBVA Spain (+11.8%) have also increased the volume of funds to double digits. Unicaja (+7.1%) is the only entity, one step below, although the growth in funds more than doubles that obtained in deposits.

Beyond the benefits that this transfer of funds from deposits to investment funds may bring to banks, this is a significant change in trend. Spanish savers traditionally have a conservative and risk-averse profile , which is why deposits are so popular. These are products that offer a specific and unchanging interest rate for leaving money for a period of time, which usually ranges from three months to one year. The interest rate depends on the ECB's monetary policy cycle. When interest rates rise, deposits offer higher returns for savings, either through remunerated bank accounts or through traditional deposits. When rates fall, deposits adjust this return downwards.

Starting in July 2022, when the ECB began a path of interest rate hikes, banks began to put deposit offers on their shelves. Rates reached 4% and at that time it was possible to find offers that paid savings above 3.5% APR. But at the moment the ECB is in the middle of a cycle of interest rate cuts (the price of money is at 2.75%) so this type of product is no longer attractive. Right now, it is difficult to find options that pay more than 3%.

In addition, Spanish banks have remained at the tail end of Europe in terms of the returns they offered on deposits . According to statistics provided by the ECB, the average interest rate offered by domestic banks on savings is 2.15%, the fifth lowest figure in the Eurozone (only banks in Greece, Slovenia, Cyprus and Croatia pay less) and significantly below the European average (2.45%). In the last two years, the highest figure reached by deposits in Spain was 2.65% in June 2024, but even at that peak, the profitability was still low compared to other European markets. In Italy, banks have paid as much as 3.9%, in France the remuneration has reached 3.79% and in Germany 3.43%.

According to financial sources, the transfer of savings is a normal movement. During the Covid-19 pandemic, households and companies accumulated savings in deposits, most of them in bank accounts, which was a historical anomaly. According to a report by the Bank of Spain, at the end of 2021, 93% of savings were in demand deposits, so the transfer to investment products is a normalization effect. Considering that inflation in January (last data available at the INE) was 2.9%, any return below that figure represents a loss of purchasing power for households and companies. And in the absence of deposits that offer such returns, Spaniards have begun to look for it in other investment products.

According to Inverco's forecasts, net subscriptions to investment funds will exceed 20 billion euros in 2025. They also expect another positive year in terms of market appreciation, with an average yield of over 3%.