The decline in deposit yields continues unstoppably, and there are now few entities among the 12 most profitable that have not modified their yields in line with falling interest rates. However, most of these products remain attractive for the saver compared to Treasury bonds, which offer an average yield of 2.579%, the lowest level in more than a year and a half.
In the 12-month auction which took place on Tuesday, the National Treasury allocated 3.344 million euros, with requests for 5.375 million, at a marginal interest rate of 2.598%, lower than the previous 2.970% and located at the lowest level since December 2022. This level would only be higher than the yield offered by the Deutsche Banks deposit, with 2.2%, and that of ING, which is the lowest, with 1.3%.
Although deposit yields remained unchanged in the first weeks in which rate cuts were already a reality, the decline in yields offered has accelerated in recent weeks. Indeed, among the 12 most profitable products with a maturity of one year, only four remain unchanged. Thus, there are still around ten vehicles with yields ranging from 2.65% to 3.20% (see graph).
Banco Finantia achieves what would be its second drop in profitability in recent weeks (the first was 3.25% to 3.15%). Now, this 3.15% is reduced to 3.10%, which is why it continues to appear on the podium for profitability over this period despite the latest declines. This deposit is available for amounts starting from 50,000 euros and is attached to the Portuguese Deposit Guarantee Fund (FGD), which guarantees the first 100,000 euros per depositor in the event of the entity’s bankruptcy.
Banca March is another of the entities that performs a decline in performance offered in recent weeks, from the previous 3.10% to the current 2.75%. Where applicable, the product can be subscribed from a minimum amount of 5,000 euros and up to a maximum of 500,000 euros. EBN Banco also leaves 3% behind profitability and now stands at 2.90%. The entity, which was one of the few to remain below the 3% barrier, has a minimum amount of 5,000 euros to purchase this vehicle.
Cetelem, the financial company of the French bank BNP Paribas, is a leader in this sense, with profitability of 3.20% which remains unreduced and without there being a minimum contractual amount. Cetelem indeed offers one of the highest yields, among the twelve most profitable at one year, in its various products, and in all cases exceeds the yield on the debt at one year.
This acceleration in the decline in profitability is accompanied by expectations of larger and more accelerated cuts in interest rates from the ECB. This week, Deutsche Bank analysts published in a report that they expected the body chaired by Christine Lagarde to cut interest rates again in October, following the fall in the inflation higher than expected in the euro zone in September. “After an even larger-than-expected fall in inflation in September, we are accelerating the ECB’s next rate cut by 25 basis points (bps) from December to October,” Deutsche Bank analysts said. They also point out that a 50 basis point cut in December (a “jumbo” cut like the Fed) could be very close. if recent weaker trends in growth and inflation continue.
Barclays is also revising its growth and inflation forecasts for Europe this week and now expects a 25 basis point cut from the ECB in October, with consecutive cuts until June 2025.
