The Central Bank of Malta has just issued its commentary on the release of monetary statistics for May 2010.

The contribution of Maltese Monetary Financial Institutions (MFIs) to the euro area broad money stock (M3) during the month decreased following two consecutive monthly rises. It contracted by EUR54.4 million, or 0.6%, to EUR8.7 billion. Consequently, its annual rate of growth eased to 1.7% from 3.0% in April 2010.

During May, the narrow money (M1) component went up by EUR70.7 million, or 1.5%, mainly due to a rise in overnight deposits. Deposits belonging to Maltese residents expanded by 1.7%, as balances held by resident insurance companies, other non-bank financial intermediaries and private non-financial firms increased significantly. However, overnight deposits belonging to residents of other euro area countries fell slightly. Currency issued, meanwhile, grew by EUR9.3 million, or 1.5%. Thus, the annual rate of growth of M1 rose further to 16.9% from 15.6% in April.

Notwithstanding this increase in M1, the month under review saw a drop in the broader intermediate money (M2) component of EUR76.4 million, or 0.9%. This was due to a sharp drop in deposits with an agreed maturity of up to two years, which contracted by EUR147.3 million, or 3.5%. Deposits belonging to Maltese residents went down by 3.7% after having been stable in April. Balances held by private non-financial firms accounted for most of the decline. Meanwhile, deposits redeemable at up to three months’ notice increased marginally.

Overall, deposits belonging to residents of Malta declined by EUR85.8 million during May. The decline in deposits with an agreed maturity of up to two years completely offset a pick-up in overnight deposits. As a result, the annual rate of growth of residents’ deposits fell to 2.1% from 3.2% last month.

Credit to residents of Malta expanded by EUR153.5 million, or 1.5%, during May. Bank purchases of government securities on the primary market pushed up credit to the general government by EUR123.7 million. Concurrently, credit to residents outside the general government sector went up by EUR29.8 million, as loans granted to households for house purchases and to the wholesale and retail trade sector in particular increased. The annual rate of growth of credit to Maltese residents climbed to 9.7% from 8.5% in April.

Meanwhile, credit to residents of other euro area Member States rose by EUR189.5 million, as resident MFIs bought debt securities issued by other euro area governments and gave out loans to non-financial companies residing elsewhere in the euro area. As a result, during the month reviewed credit to all euro area residents expanded by EUR343.0 million, or 2.5%.

The external counterpart of M3, which reflects transactions between MFIs resident in Malta and non-euro area residents, increased by EUR32.9 million, or 0.4%, in May. Claims on non-euro area residents rose as resident MFIs added to their holdings of securities issued by governments outside the euro area. At the same time, liabilities to non-euro area residents in the form of time deposits held with resident banks also rose.

The ‘other’ counterparts of M3 went up by EUR430.3 million, or 3.4%, during the month under review. This was mainly due to interbank transactions taking place across the euro area, which are included in ‘other liabilities (net)’. A rise in loans taken up by resident MFIs, coupled with increased time deposits belonging to other euro area banks, offset a pick-up in resident MFIs’ time deposits with banks resident in the rest of the euro area.

The weighted average interest rate applied by resident credit institutions to customer deposits declined slightly to 1.39% from 1.40% in April, as did that charged on loans, which also edged down by one basis point to 4.46%.

Permalink: The Central Bank of Malta issue monetary statistics for May