Rush to save sees banks benefit from surge in deposits

The big four banks were the biggest beneficiaries from a rush of deposits during the market turmoil of February and March.

The big four banks were the biggest beneficiaries from a rush of deposits during the market turmoil of February and March with $60bn being channelled into their accounts over the period.

Indeed, the lenders — ANZ, Commonwealth Bank, National Australia Bank and Westpac — scooped up more than half of the $109bn in additional deposits during the first three months of the year, according to figures compiled by bank regulator the Australian Prudential Regulation Authority. In total, deposits increased by 5 per cent during February and March.

A plunging sharemarket and concerns on the outlook for the property market prompted many to increase their level of bank savings — even though most accounts are offering next to nothing in interest.

The commitment of the Reserve Bank to pump tens of billions of dollars in liquidity also alleviated concerns over the health of the banking system.

At the same time, the rush of deposits has helped ease the balance sheet pain of the major banks, which has enabled them to rely on their own deposits and away from global money markets to help fund their lending book. The RBA recently calculated that the flow of deposits would offset their maturing bond funding for at least six months.

Most of the lift in deposits came from business customers, which added $30bn to the system as they put investment plans on hold and boosted liquidity while the COVID-19 crisis accelerated.

ANZ retail and commercial banking group executive Mark Hand also noted that as businesses requested bigger loan facilities to help with a cash flow squeeze, they drew on the facilities “and most of them put it back on deposits, which is why you can see an elevated deposit base right across our business”.

ANZ and CBA were also some of the biggest beneficiaries of a $10.2bn rise in household deposits in absolute terms in February and March, the APRA figures show. But the greatest percentage growth in deposits was from ­Macquarie Bank, where deposits from households increased $849m, or 6.8 per cent.

ANZ’s household deposits were up 1.6 per cent at $125.7bn, while CBA’s household deposit were up 2 per cent at $269.2bn. NAB and Westpac’s household deposits were largely steady during the March quarter.

All savings accounts in Australia are insured by APRA to a maximum value of $250,000.

The neobanks also saw an increase in deposits during the ­period, with Judo the clear winner in deposits from households for March. It took in $692m.

Xinja and 86 400 also experienced an uplift, although from a small base.