The volume of corporate and household deposits in Estonia and the annual deposit growth rate. Source: Bank of Estonia

TALLINN — Estonian household savings rose by 152 million krooni (€9.72 million) in July, according to the Bank of Estonia, despite interest rates that discourage saving.

Siret Vildo, a Bank of Estonia’s financial sector policy division specialist wrote in a press release that the growth in household savings more than offset a fall in corporate savings, bringing total savings to 106 billion krooni.

The most popular form of public savings is timed deposits, which now absorb 62 percent of the total.

The healthy savings data is to some degree reflected by the national bank’s positive feedback about the health of the local banking sector.

Although additional loan write downs by banks caused the aggregate capital adequacy ratio to decline by 0.6 percent in July, it still stood at a 21.2 percent.

The under-capitalization of banks was one of the key factors that caused banks to fail around the globe and the Estonian national bank requires banks to exceed a minimum 10 percent ratio, so the local banking sector is operating at over double this threshold.

Consumers are not being well-rewarded for their saving efforts however. This was highlighted in July when Eurobor decreased by 0.2 percent but interest rates on both housing and corporate loans remained unchanged compared to June. The average interest rates on housing loans and long-term corporate loans were 3.8 percent and 4.3 percent, respectively. Meanwhile interest rates on deposits have decreased from February for all categories except commercial institutions.