World Savings Day

In 1924, at the first international congress of savings banks in Milan Italy, 354 representatives of approximately 7,000 savings banks and their branches from 27 countries selected 31 October to be the World Savings Day. The main goal of the congress was to encourage the population to save, especially in the form of deposits on accounts in commercial banks and savings banks. 

The World Savings Day is intended to promote savings across the world and to raise awareness of the public about the importance of saving for modern economies and individuals. According to the latest data, the World Savings Day is celebrated in 80 countries.

Saving has a long tradition in Slovenia (of approximately two centuries), since saving banks were the first form of banking activities in Slovenia. The first and oldest financial institution in Slovenia was the savings bank Ljubljanska hranilnica, established in 1820. In 1845, it was renamed the saving bank Kranjska hranilnica. Later on, numerous city savings banks and credit cooperatives, called loan institutions, were established. The establishment of the first Slovenian joint-stock company, the Ljubljana Credit Bank, in 1900, marks also the beginning of the development of banking in Slovenia.

What is saving and what are the most important motives for saving?

Household saving represents that part of disposable income that is not spent for the purchase of durable goods, consumer goods and services, but is saved. Household savings thus equal disposable income less final consumption.

The ECB research showed that the most important motives for saving of households in euro area countries are ensuring of funds in case of unexpected events, ensuring an income at retirement, provision of funds for larger purchases (additional housing, furniture, vehicles) and saving for travelling (vacations), education and financial support for children or grandchildren.

Gross household saving rate in Slovenia remains above average high
 
After the highest estimated gross household saving rate in 2020 (22.7%), in 2021 the rate declined to 18.7%. Despite the decline, it was higher than in the period before the COVID-19 pandemic (the long-term average from 2011 to 2021 was 13.8%).

Based on the latest available data from Eurostat, in 2021 the gross household saving rate was the highest in the Netherlands (23.9%) and the lowest in Portugal (9.8%). In Slovenia, it was the fourth highest among the observed European countries, and at the same time, it was above the average in the euro area (17.9%) and in the European Union (16.7%). 


Households’ savings in all European countries down
 
Households’ decisions about consumption and savings depend largely on their disposable income. In 2021, gross disposable income increased in all European countries (data were available for 13 countries). Compared to 2020, it increased the most in Hungary (by 11.3%) and the least in Germany and Finland (in both by 2.7%). In Slovenia, it was 7.7% and exceeded the average growth of gross disposable income of households in the euro area (4.0%) and in the European Union (4.5%). In the remaining observed European countries, growth of gross disposable income ranged from 3.1% to 10.9%.

Household final consumption expenditure increased in 2021 in all observed European countries. Compared to 2020, the highest increase was observed in Slovenia (by 13.3%). Growth of final consumption expenditure of all households in the euro area (6.3%) and in the European Union (6.7%) was on average significantly lower than in Slovenia. In the remaining observed European countries, growth of household final consumption expenditure ranged from 3.5% to 11.6%.

In 2021, the gross household saving rate decreased in all observed European countries (Hungary and Czechia were the exceptions). The lower savings largely reflect increased consumption expenditure and lower growth of gross disposable income. Compared to 2020, the highest decreases in gross household saving rates were observed in Slovenia (by −4.0 p.p.) and Spain (by −3.9 p.p.) and the lowest in Denmark (by −0.6 p.p.) and Germany (by −0.7 p.p.). In the remaining observed European countries, the gross household saving rates decreased in the range from −1.0 p.p. to −2.5 p.p.



Financial assets of households in Slovenia higher

At the end of 2021, the value of net financial assets (the difference between assets and liabilities) of households in Slovenia amounted to EUR 55.2 billion or 106% of GDP (in the euro area 180% of GDP, in the European Union 178% of GDP). 

Compared to 2020, net financial assets increased by EUR 6.9 billion (or by 14.3%), the most to financial corporations (by EUR 3.1 billion), followed by non-financial corporations (by EUR 2.4 billion) and to the rest of the world (by EUR 1.5 billion).

At the end of 2021, household financial assets (currency and deposits, shares, etc.) amounted to EUR 70.9 billion. Compared to 2020, financial assets increased by EUR 7.8 billion (or by 12.4%). Equity and investment fund shares or units contributed the most to the increase of household financial assets in 2021 (by EUR 4.0 billion). After a record increase in bank deposits in 2020 (by EUR 2.3 billion), in 2021 they increased to a slightly lesser extent (by EUR 1.7 billion). Currency (EUR 1.1 billion) and insurance and pension schemes (EUR 0.6 billion) also made a noticeable contribution to the growth of household financial assets in 2021.

Banks accounted for 34.8% of households’ financial claims, non-financial corporations for 25.6%, insurance corporations and pension funds for 12.8%, the rest of the world for 11.2%, and central bank for 8.9%.

The ratio of household financial assets to GDP has been increasing in Slovenia in the last few years, but it is considerably lower than in the euro area and in the European Union overall: the figure stood at 136% of GDP in Slovenia at the end of 2021 (compared with 245% of GDP in the euro area overall and with 242% of GDP in the European Union).

Households in Slovenia remain conservative and risk averse in their investment decisions

The structure of household financial assets in Slovenia has not changed significantly compared to previous years. The highest share is still represented by currency and deposits (47.8%; share of deposits was 37.9%), followed by shares and other equity (32.2%), insurance (in particular life insurance) and pension schemes (12.5%), debt securities and other receivables (5.3%) and loans (2.2%). 

Such a structure of financial assets suggests that a conservative form of savings prevails among Slovenian households, and their investment decisions prioritise security over return, as they have been in the highest percentage for more than a decade in the form of cash and deposits, while the percentage of riskier investments remains relatively low.

Currency and deposits are also prevalent in the euro area (in 2021: 33.1%), but the share is much lower than in Slovenia. More assets are held in the form of insurance (especially life insurance) and pension schemes (31.2%) and slightly less than in the form of shares and other equity (31.1%).


Growth of loans to households continued to grow, while their average indebtedness remained significantly lower than the euro area and the European Union average

At the end of 2021, household financial liabilities (loans and other liabilities) amounted to EUR 15.7 billion or 30.1% of GDP. Compared to 2020, financial liabilities increased by EUR 0.9 billion (or by 6.1%) and thus already exceeded the levels before the onset of the pandemic. In particular, long-term loans (repayment maturity longer than one year) increase (by EUR 647 million) stood out. Long-term loans are mainly intended for financing the purchase of residential real estates.

Banks accounted for 74.0% of households’ financial liabilities, non-financial corporations for 9.6%, other financial intermediaries for 8.5%, general government for 4.9%, rest of the world for 1.7% and insurance corporations for 0.9%.
 
The highest share in the structure of household financial liabilities in Slovenia is represented by loans (87.7%), within which the share of long-term loans stands out (81.8%), followed by trade credits, advances and other liabilities (12.3%) and short-term loans (6.0%).

Among the individual types of loans, housing loans maintained positive dynamics during the observed period and grew steadily. After falling in 2015, consumer loans grew significantly faster than housing and other loans in the period from 2017 to 2019. However, in the last two years consumer loans fell again (among other things due to the macro-prudential restrictions on household lending). Since 2017, the growth rate of other loans has been positive. Compared to the dynamic of housing and consumer loans, the dynamic of other loans has been more moderate. In 2021, compared to 2014, housing loans increased by 39.8%, consumer loans by 23.1% and other loans by 13.5%.

Households’ debt in Slovenia (measured as the ratio of financial liabilities and gross disposable income) declined in 2021 compared to 2020 (by −0.7 p.p.) and stood at 47.8%. According to this indicator, households’ indebtedness in Slovenia was on average much lower than the average households indebtedness in the euro area (103.5%) and in the European Union (103.9%).