The growth of household deposits in the banking system has taken a step-change lower. And it has stayed down.
The Reserve Bank has the data (S40). For all of 2024 and the first eight months of 2025, year-on-year growth in household deposits averaged more than $15 billion per month.
But that then transitions lower to an average of just over $10 billion per month.
Year-on-year growth of household bank deposits
| 2024 | 2025 | 2026 | |
| $ bln | $ bln | $ bln | |
| Jan | 14.437 | 16.791 | 9.829 |
| Feb | 13.676 | 17.130 | 9.585 |
| Mar | 14.383 | 15.940 | 10.719 |
| Apr | 14.173 | 17.456 | 10.659 |
| May | 14.794 | 16.158 | 10.710 |
| Jun | 13.530 | 16.819 | |
| Jul | 15.201 | 15.427 | |
| Aug | 13.433 | 15.256 | |
| Sept | 15.873 | 13.024 | |
| Oct | 16.011 | 11.928 | |
| Nov | 15.732 | 11.181 | |
| Dec | 17.451 | 10.582 |
The latest data update, for June, is due this Friday and it will be a surprise if it doesn't extend the lower trend.
Households with term deposits are noticing this step down. And they seem to regards this in a risk-aversion sense.
Their reaction has been to hold more in transaction accounts. The liquidity impulse is stronger.
Although the chart shows this impulse is definitely there, it would be wrong to overstate it. Check the left-hand axis - the shift is only about 1½%. However that is 1½% of $142 billion, which means households are keeping an extra $3 billion every month in ready cash, rainy day cash reserves.
Retailers will notice that caution too.
It's a move that reprises the pandemic shift, one that was much more pronounced back then. For most of 2019 households had less than 15% of their bank account balances in transaction accounts. But as fear and uncertainty rose in the 2020 to 2022 period, that jumped to over 24%. The current worry levels are not back at those levels, but this analysis shows that they are rising and that households are shifting their ready cash allocations to a more risk-averse mode.
8 Comments
Maybe people realise the difference between the rate their savings are being trashed by inflation isn't different enough between money on call and money tied up? At least money on call can be applied to any opportunity that may magically appear?
That's graphic data, factor in inflation and its even more telling.
That stat about how many kiwis could cope with an unexpected $500 bill is also worrying.
https://www.rnz.co.nz/news/business/773464/40-percent-of-kiwis-taking-o…
Approximately 28% of New Zealanders—more than one in four—cannot cover an unexpected $500 bill without borrowing money, selling an item, or using a credit card.
That’s bloody grim. Seems like we’re living beyond our means and the quality of life for many is hanging by a thread. I see no way out of this?
Goes to show, the impact of the ever-expanding private debt up until the last few years, and is revealing our true economy without relying on increasing property prices. Necessary medicine in some ways, but we have a foolish govt once again who have, as with their predecessors, scuppered their chances to actually do something of value to the nation other than speaking hollow words.
The picture of a bubble wrapped kid seems out of place?
You need a guy in a suit panhandling or something.
Gotta up your AI game
:)
But the story is about growing risk aversion. The data doesn't show anything about a loss of assets, only that asset growth is slowing.
Main reasons for changes in total nz bank balances:
- new bank lending net of repayments (+)
- interest added to accounts by banks (+)
- rbnz / Govt influence - bond sales (-), bond payouts (+) govt spending (+), taxation (-) etc
While it looks like bank balances have stopped increasing as much, the main reason is lower interest rates on savings/term deposits. Banks are adding about 2% to bank balances at the moment - $10bn a year. Obviously it was higher when interest rates were higher.
We welcome your comments below. If you are not already registered, please register to comment
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.