Even though the private sector has been hardest-hit by the coronavirus pandemic – as some businesses have lost significant revenues, which has resulted in job losses among others – the Statistical Bulletin report (May-2020) shows that banks’ deposits from the sector is rather growing; a trend analysts say may show businesses are gradually recovering, albeit slowly, after government relaxed restrictions.

From the data, total deposits from the private sector in January was GH¢73.1billion; but this declined marginally in February to GH¢72.9billion. However, the figure has been on a climbing trajectory since then, recording GH¢73.8billion in March, GH¢74.6billion in April and GH¢78.1billion in May 2020.

Of particular interest is savings deposits, which declined marginally in March to GH¢13.4billion from the GH¢13.6billion recorded the previous month – probably because of depositors’ spontaneous reaction of withdrawing cash to stock up food and medicines in anticipation of the lockdown announcement later that month. This, however, did not continue in the ensuing months, as savings deposits in April increased to GH¢13.8billion and a further GH¢14billion in May.

Commenting on this, banking consultant Stephen Asare says the increase in deposits, especially savings deposits, may be the result of gradually opening-up the economy, which is bringing some income to individuals.

“It appears that customers were withdrawing money in March to make sure they had enough at home to take care of themselves during the lockdown, and that is what we see in the data. The increase in deposits may also be due to when the lockdown was relaxed, people started going back to work and earned some income – and so they could save.

“One thing is that if businesses are not generating money, it will affect the deposits growth. So, even though there are job losses and income losses, some parts of the private sector are gradually coming back to normal because the economy is opening-up. And once the economy opens up, people will start earning incomes – even though, at a slower pace,” he told B&FT in an interview.

Financial Advisory Leader of Deloitte, Yaw Lartey, says it reflects investors’ confidence in the banking sector; especially due to uncertainty in the global markets and declining returns on government bills.

“The increase in savings deposits over the last few months is attributable to a number of factors, and confidence in the banking sector is one of those factors. There has been increased confidence in the banking sector following banking sector reforms over the last two years.

“Beyond that, there are other factors such as uncertainty in the global and national economies as a result of the Coronavirus pandemic – which has caused investors in projects and companies to adopt a ‘wait and see’ attitude. Consequently, investors have opted to invest in safer assets like short-term deposits,” he told the B&FT in an interview.

He added: “The other factor that has led to an increase in savings deposits is the decline in returns on government securities. Returns on the 91-day Treasury bill, for instance, declined by about a percentage point from 14.2 percent as at end of February to 13.2 percent in May 2020. Investors found it prudent to keep their funds in the banking sector as opposed to investing in government securities.

“In essence, confidence in the banking sector cannot be ruled out as one of the factors which caused an increase in savings deposits; but uncertainties in the economy as a result of pandemic have caused a decline in real asset investment, and the decline in returns on government securities contributed to the increase in savings deposits.”