MILAN (Reuters) – Residents’ deposits with Italian banks fell by 15 billion euros month-on-month in April as rising interest rates prompted mostly corporate depositors to shift money out of current accounts to seek better returns for their cash, data showed on Tuesday.
Deposits fell by 3.7% year-on-year in April to 1,796 billion euros from 1,781 billion in March, when they had dropped 3.0% annually, a monthly report by Italian banking association ABI said.
When compared with April 2022, the drop in deposits is 68.1 billion euros, ABI said.
Depositors’ search for remuneration is set to drive funding costs higher for Italian banks, which reported record profits in the first quarter thanks to higher interest rates on loans.
ABI said the gap between the average rate Italian banks charged on loans to businesses and households and that paid to raise funding was 317 basis points in April, up from 301 basis points in March.
Challenger banks, which typically have no branch network, are the most exposed to the rise in remuneration demanded by depositors.
In an interview with an Italian daily on Saturday, veteran banker and chief executive of challenger bank illimity, Corrado Passera, said he expected competition for deposits to intensify in coming months.
His bank is advertising a 2.5% rate on current accounts. ABI said the average rate on current account deposits in euros was of 0.29% in April.
(Reporting by Valentina Za and Giancarlo Navach, editing by Federico Maccioni and Christina Fincher)