Savings deposits with Bermuda banks are up about 21 percent but not so for the Island's deposit companies, according to the latest Bermuda Monetary Authority (BMA) quarterly report.

The BMA 1994 third quarter report shows savings deposits with banks rose from $1.02 billion for the third quarter of 1993 to $1.23 billion while savings deposits with deposit companies increased seven percent from $914.9 million to $978.6 million for the same period.

While the dollar amount is climbing for savings deposits at the Island's banks and deposit companies, the percentage rate of growth at the latter has declined sharply since 1991 after more than doubling from third quarter 1990 to third quarter 1991.

Third quarter figures for 1991, 1992 and 1993 for deposit companies were 10.1, 24.2 and 18.8 percent compared to increases of 6.7, 5, and 8.9 percent for bank savings deposits.

Recent changes allowing non-Bermudians to hold Bermuda dollar accounts as well as the freedom for people to move money in and out of Bermuda through the same bank has had an impact, the latter no longer carries a 10 percent government tax, it is now only one-quarter of a percent, according to Mr. Malcolm Williams, BMA general manager.

"The gradual liberalisation of exchange control is having its effects,'' he said.

"I think this (liberalisation) will reach the deposit companies,'' he added.

Some of the increase for both can be attributed to interest earnings with interest rates for bank deposits around four percent while deposit companies tend to offer higher rates. The interest rates are linked to amount and time.

"People tend to save during recession,'' added Mr. Williams, referring to the previous three third-quarter increases for deposit companies.

Mr. Arthur Haycock, president and CEO of Bermuda Home, agreed; "sometimes people tend to save more during a recession...total growth seems to have slowed though.'' Other investment options like the recent rights issue and share offering may have been factors also, he continued.

Mr. James Gibbons, managing director at Gibbons Deposit Company (GDC), agreed the decline in savings deposit percentage could be linked to recent share offerings, Bermuda Home, for example.

"Some people said they were using money for Bermuda Home, rights issues took money out as well,'' he added.

Mr. Gibbons said GDC's results are significantly higher than the overall seven percent.

The combined growth of banks and deposit companies was 14.1 percent.

Meanwhile, the report concluded that the positioning of the money supply "reflects the desire of Bermudians to save...mortgages and loans increased by $80 million or 11.2 percent to $792 million from quarter three 1993 showing the desire of Bermudians to own their own homes remains strong.'' Mortgages and loans represent 80.9 percent of customer deposits at the end of quarter three, or a 3.1 percent increase over last year.

"The maximum is 85 percent under the monetary authority but I would not want to see the deposit industry drop below 20 percent liquidity,'' commented Mr.

Haycock.

"The proportion of Bermuda dollar deposits with banks and deposit companies lent out as loans, advances and mortgages steadied to a reasonably prudent level of 80.8 percent,'' according to the report.

The 1994 third quarter money supply also eclipsed $50 million, an increase of 7.1 percent over last year's third quarter.

And assets of Bermuda banks exceed $11.5 billion of which foreign currency assets are $10.3 billion.

The report also indicated: Bermuda money supply growth is up 15.43 percent from $1.72 billion to $1.98 billion. Part of the increase; interest earned on deposits, the easing of exchange controls and inflation. The resurgence of tourism earnings and the continued growth in international business were also factors.

There were 285 applications for company incorporation or partnerships processed by the BMA, an increase of four percent.

At the end of August there were 529 collective investment schemes, an increase of 27.7 percent over third quarter 1993, with a net asset value of $12.4 billion. Local company applications processed, 64, up 12.3 percent from the 57 processed last year while exempted company applications processed increased from 217 to 221, an increase of 1.8 percent.

The aggregate balance sheet total of $11.6 billion is an increase of $167 million for combined balance sheets of banks and deposit companies.

The current account net surplus for the balance of payments rose to $48 million, up $2 million or 4.3 percent.

Mr. Malcolm Williams