According to the latest BPCE/Audirep “savings and investments” barometer – an in-depth survey of the behavior of French people in financial matters that the group carries out three times a year – if the rate of the Livret A and the sustainable and solidarity development booklet ( LDDS) went to 3%*, half of French people would consider increasing their payments on these booklets in the following months. 47% would carry out transfers from another medium to these passbooks, and 58% would carry out at least one of these two operations (transfer and/or payment).
In seven out of ten cases, arbitrations would be done from a current account. Only 12% would draw on a home savings plan or life insurance.
Increase in the “psychological threshold” of the remuneration of the booklet A
In the current context of high inflation and rising bond yields, the “sensitivity” of savers to interest rates is logically gaining ground.
Asked about the level of remuneration from which it becomes interesting to transfer the remaining sums from their current account to a passbook A, the households questioned in November 2022 quote in the majority of cases an “incentive” rate of between 3% and 5% while this range was rather between 2.5% and 4% last year. The “psychological threshold” of remuneration of the booklet A for households thus goes on average from 2.5% to 3.5%.
Profiles of Livret A holders
More precisely, the intentions of the French on the management of their savings accounts A in anticipation of a new increase in their return vary according to the uses. According to BPCE, we can distinguish five standard profiles of Livret A holders:
- “Average” savers, whose passbook A savings are high and/or rising (27% of passbook holders): for these profiles, the rise in the rate is a great incentive. 72% plan to feed their savings accounts more in the event of an increase in performance;
- Savers with the account at the ceiling, or very well funded (24%): the rate increase should convince a little less than half of these profiles to increase their payments, logical since this group of savers has already, for a large part , a ceiling account;
- Those “attached to the booklet A”, who feed it regularly, especially young people (17%), but whose account is moderately funded (from around €5,000 to €15,000). For this group, the rise in the rate will also be a strong incentive, at 67%.
- Users whose accounts are dormant or without movement (12%) who rarely make payments: the increase in the Livret A account should convince a little more than half of these profiles to increase their payments;
- Finally, low-income “dissaving” households, whose use of the Livret A account is reduced due to their very limited savings capacity (14%). For the latter, and despite their financial difficulties, the rise in the rate represents an opportunity that 59% intend to seize by increasing their savings accounts.
An increase in the beneficial rate for all booklets…
By observing the impact over three months of the evolution of household savings during the last two rate increases for the Livret A, in February 2022 (yield increased to 1%), and last August (increased to 2%) , and taking into account changes in the economic and financial context (inflation, extent of increases in regulated rates, impact of the high rate of the People’s Savings Account, etc.), BPCE economists have attempted to measure the potential effects of a new rise in the rate of the livret A in the coming months.
According to their simulations, this should be very positive for all savings accounts, considering that an increase of 30 basis points in the Livret A savings account is accompanied on average by an additional 11.2 billion euros per year on these investments. Considering that the increase in February should be around 130 basis points, more than 48.5 billion additional euros could be deposited in all regulated savings.
… to the detriment of life insurance?
Flows that could be made more at the expense of life insurance, in particular funds in euros, than sight deposits, or even term accounts, especially since the latter, also benefiting from the rise in interest rates, have resumed colors since the 3rd quarter of 2022.
The unknown of the popular savings account
The big unknown in the equation remains popular savings accounts (LEPs): with remuneration set to rise to 6.1% next month, i.e. at a level slightly above current inflation, LEPs could attract a savings placed on savings accounts A and LDDS. BPCE assesses an a priori impact of an additional 750 million deposited on LEPs for a 30 basis point rate increase. If the LEP rate increases from 4.6% to 6.1% in February, the current scenario, this impact would therefore be multiplied by five (3.75 billion euros).
Forecasts which are however difficult while these investments, which remain reserved for low-income households, are still underused: according to estimates by the Banque de France, only 37% of the 18.7 million eligible French people held a LEP aware of the year 2022.
However, the increase in remuneration was a strong driver for the rate of adoption of these booklets in 2022, the Banque de France recording a record number of openings in the first five months of the year (824,000). A return of more than 6% should obviously still be very profitable for him.
*The survey was conducted in November 2022.