Rising deposit rates in the wake of high inflation

The average annual interest rate on Danish private customers' deposits was 0.69 per cent in March 2023. This is an increase of 0.86 percentage points compared to a year ago and the highest interest rate level since 2015. Even though the interest rates are positive again, private customers will experience that the value of their savings in the bank is eroded due to the high inflation. The increase in consumer prices (inflation) was calculated at 6.7 per cent for March 2023.

Danish private customers' average deposit rate is back at the level of 2015
Average effective interest rate on Danish private households’ (sector 1430) deposits excl. pooling schemes.

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The interest rate increases on Danes' deposits come after Danmarks Nationalbank's interest rate increases in the past year. In comparison, the average interest rate on Danes' loans in the banks has increased from 3.19 per cent to 4.89 per cent. This is almost twice as much as the interest on deposits in the past year has risen, thus it increased the banks' interest margin.

Interest rate depends on the type of deposit

Almost three quarters of private customers' deposits are placed in accounts without commitment. Those
deposits had an annual interest rate of 0.61 per cent on average in March 2023. Accounts without commitment are primarily regular salary accounts and budget accounts - either without interest or with a
limited interest - but savings accounts are also included, where customers e.g. can only withdraw for free once a month. In addition, there are also lending-related deposits, e.g. priority accounts, where the interest rate usually reflects the higher rate on the associated priority loans in the customer's property.

The remaining part of private customers' deposits has some form of commitment. These can be savings accounts with an agreed maturity in a specific number of months, as well as pension accounts and children's savings. In March, the interest rate on private customer’s committed deposits which are not invested in pooling schemes was on average 1.22 per cent.

Deposits increased to kr. 1,089 billion

Over the past year, private customers' deposits have increased by kr. 34 billion to kr. 1,089 billion (of which kr. 168 billion in pooling schemes), corresponding to an annual growth rate of 3.2 per cent. This corresponds to, on average, each Dane having approx. kr. 183,000 in the bank. However, the average does not reflect a typical Dane, as the variation in Danes' bank deposits is very large.¹