Israelis Chasing Low-Yield Deposits While Ignoring Higher Returns
Bank of Israel data shows Israeli savers deposited 14 billion shekels in low-yield short-term accounts in September, largely ignoring higher-paying financial funds.
Israeli savers continue to park billions of shekels in low-yield short-term bank deposits while largely ignoring more lucrative financial funds, according to Bank of Israel data for September.
Short-Term Deposits vs. Financial Funds
Data shows that 43% of funds transferred from current accounts to deposits went into short-term products offering negligible interest rates. In September, approximately 14 billion shekels were deposited in terms of up to one month—including daily and weekly deposits—yielding an average annual interest rate of just 1.36%, which likely results in real-value erosion.
In daily deposits alone, where the public deposited about 6.3 billion shekels in September, the average interest rate stood at roughly 0.67%. Meanwhile, financial funds offering an attractive annual return of 3% to 3.25% attracted a maximum of about 4.6 billion shekels in asset growth, raising less than a third of what short-term bank deposits managed to pull in.
Breakdown of Fixed-Rate and Bank Offerings
Following short-term options, the primary destination for savers was fixed-rate deposits spanning six months to a year, which captured about 8.6 billion shekels at an average annual interest rate of 3.54%. An additional 4.72 billion shekels were deposited for fixed periods ranging from one to five years at an average rate of 3.16%, while deposits lasting one month to six months absorbed roughly 4.1 billion shekels at a 2.63% average rate.
For one-year fixed-rate deposits totaling 8.6 billion shekels in September, smaller lenders led the pack: One Zero offered a 6% rate for deposits up to 100,000 shekels exclusively for new joiners, followed by Bank of Jerusalem with 3.6%. In variable-rate one-month deposits totaling 1.75 billion shekels, Bank of Jerusalem led with a median rate of 2.75%, followed by One Zero at 2.5%. For one-to-two-year fixed deposits amounting to about 3.5 billion shekels, Bank Yahav offered the highest rate at 3.8%, whereas Bank Masad trailed at the bottom with 1.9%, followed by Discount Bank at 2.4%.
