“Uncertainty” is the watchword of the day, and it has had a dampening effect on consumer deposit growth. Growth was a full percentage point lower in the first quarter than in Q1 ’24, and the slowdown is affecting both top-half and bottom-half bank performers, according to data from Curinos’ Consumer Deposit Analyzer (see chart). While banks saw an average of 1% to 3% growth in Q1 ‘24, the range shifted downward to flat to 2% in Q1 ‘25, and that’s before accounting for the seasonal April consumer-tax-deadline outflows that will reduce 2025 deposit growth even further.
Leading the decline has been runoff in CD portfolios. During the comparable period last year, when CD rates peaked, most financial institutions were able to grow CD balances by a range of 6 to 12%. These same CDs are now coming to maturity a year later, at a time when most banks have decreased CD rates by as much as 100 bp. What had been a growth engine has now become the source of contraction.
The good news, as we’ve covered in recent posts, is that an increasing portion of CD maturities are switching to liquid accounts such as savings and money market accounts. Savings grew in the first quarter about 2% more than in Q1 ’24, and checking shifted back to growth mode after having stayed mostly flat in the same period last year. But CD declines have outpaced this recapture, and if rates fall further later this year that will make managing CDs all the more important. Deposit managers will need to balance retention with cost targets as rates are poised for a fall later this year and as continuing uncertainty continues to create headwinds for deposit growth.
Industry Consumer Deposit Growth by Product | Traditional Banks |
Q1 ’24 vs. Q1 ’25
Source(s): Curinos Consumer Deposit Analyzer | Note(s): *Top and bottom half of banks are ranked by total growth over the Q1 ‘24 and Q1 ‘25 individually.
