Montenegro’s banking sector is seeing a gradual shift in the structure of its deposit base, with households and domestic companies increasing their balances while non-resident and government deposits decline. Total bank deposits reached €6.06 billion at the end of June, representing a 6.02% increase from a year earlier. Household deposits accounted for the largest part of the increase, rising by almost €297 million to €2.50 billion.
Deposits held by the non-financial sector also expanded, increasing by approximately €125 million to €1.77 billion. Combined, households and non-financial companies represented more than 70% of total deposits.
Household Deposits Gain Ground
The stronger increase in household savings changed the composition of bank funding. The household share of total deposits climbed from 38.61% to 41.32% over the year. At the same time, deposits belonging to several other sectors declined. Non-resident deposits fell by approximately €40.5 million, ending June at €1.15 billion. Their proportion of the total deposit base consequently decreased from 20.86% to 19.00%.
Government deposits also contracted, falling by around €45.7 million to €465.7 million. Their share declined from 8.95% to 7.69%. Financial-sector deposits decreased by approximately €18.1 million, while deposits held by non-governmental and other non-profit organisations increased by about €26.4 million.
Domestic Funding Becomes More Prominent
The combined movements have produced a deposit structure with a larger domestic component. Household and non-financial company balances more than offset reductions among non-residents, the government and the financial sector.
The decline in non-resident deposits reduces the relative importance of a funding source that can be more mobile during periods of uncertainty. At the same time, the larger role of domestic deposits means future expansion of the deposit base will be more closely linked to household incomes, corporate cash flows and tourism receipts. The reduction in government balances may be related to the timing of public-sector revenues and expenditures rather than representing a permanent withdrawal from banks. It nevertheless contributed to a period in which loan growth was significantly faster than deposit growth.
Most Deposits Remain Available on Demand
Households represent a relatively stable source of bank funding, but the maturity structure of Montenegro’s deposits remains heavily weighted toward immediately available funds. More than 84% of all deposits have no fixed maturity. This provides banks with a relatively low-cost source of funding, while also creating a maturity difference between deposits that can be withdrawn immediately and longer-term loans.
The shift in deposit composition does not point to capital flight. Total deposits continued to increase, while the growth of domestic balances compensated for declines in other categories. Instead, the figures show a gradual change in the sources financing Montenegro’s banking system, with residents and domestic companies accounting for an increasingly important share of bank liquidity.
