“As evidence of the growing attention and curiosity about deposit accounts, there is the fact that the interest of users visiting ConfrontaConti.it from May to early September had already increased by more than 100 percent, and from early September to the present has registered an additional 100 percent”
The first hint of rising yields for deposit accounts is already visible, though well behind the mighty rise in inflation.
The night in the stock market does not seem close to ending, and the rise in interest rates has rekindled the focus on several low-risk defensive investments. As always, yields are well below the current inflation rate. At the same time, to shelter at least some purchasing power from rising prices and possible short-term losses in bonds and stocks, investors can now consider alternatives long negated by rock-bottom rates.
Hence the growing interest in deposit accounts. This investment can count on the guarantee of up to 100 thousand euros and consists of tying up a sum for a certain period (with varying conditions to be studied on a case-by-case basis). The interest offered could be compared to the national government bond of the same duration, but the requirements for returning to early possession of one’s liquidity are very different. By contrast, early withdrawal involves penalties or waiver of interest. In contrast, the bond can be quickly liquidated at market price: at best (yields have fallen relative to the time of purchase), it can be sold at a profit before maturity. In any case, as we shall see, yields between Italian bonds and deposit accounts are not very closely aligned.
“As evidence of the growing attention and curiosity about deposit accounts, there is the fact that the interest of users visiting ConfrontaConti.it from May to early September had already increased by more than 100 percent, and from early September to today, it has registered an additional 100 percent,” the MutuiOnline group company specializing in comparing offers on deposit accounts told this newspaper.
The rise in ECB rates is a factor that, in the future, should increase the returns offered by this liquidity-paid parking lot. “The data show that interest is shifting significantly toward captive products, which have the advantage of offering higher remunerations,” said ConfrontaConti.it, “at the same time, there is a tendency to seek longer durations, greater than or equal to 36 months. It is from these durations onward, in fact, that the most attractive offers from the various institutions are concentrated.”
“In conjunction with the search for products with longer durations, we are seeing an increasingly fragmented and competitive market,” added the specialized portal, “where the succession of promotions on rates and, in some cases, the stamp duty paid by the bank, contribute to increasing the savings options for customers.”
How much do deposit accounts yield today
The most up-to-date data from the Observatory conducted by ConfrontaConti.it are for August 2022 and therefore does not yet incorporate the effects of the sharp 75 basis point hike adopted by the ECB in September and operational since the following month. However, the first hint of an increase in yields for deposit accounts is already visible – albeit significantly behind the mighty rise in inflation.
According to October 3, the effective 12-month yield on deposit accounts offered in Italy can range from as low as 0.10 percent (Cherry Bank) to 1.19 percent (Banca Cf+’s Conto esagon). These do not peer comparisons because, in the former case, for example, the deposit is free; in the latter, on the other hand, the amounts are tied up for 365 days. If the market climate were to become favorable for a return to different asset classes before the one-year maturity, the more profitable, captive option would cost more in terms of “lost” opportunities. Conversely, a prolonged pessimistic scenario (or a firm desire to escape risk) would see the constrained option as more cost-effective. Stretching maturities over 36 months, the maximum interest currently offered by the market comes to 1.94 percent effective (Illimity, restricted funds), while the most advantageous free deposit offers 0.82 percent (Banca Progetto). How much does a three-year Btp yield today? More: 3.125%, but it may prove more volatile over its existence. It also does not provide guarantees of repayment in the event of issuer default (remote, but still possible).
