NS&I Direct Saver rate change and provisional Q3 2011-2012 results
NS&I is reducing the interest rate on its Direct Saver account by 0.25% per annum from today (25 January 2012). The rate will reduce from 1.75% to 1.5%.
NS&I sets its interest rates to balance the interests of its savers, taxpayers, and supporting stability in the wider financial services market. NS&I has a Net Financing target set each year by HM Treasury. In 2011-12 NS&I’s target is to deliver £2 billion of Net Financing (in a range of £2 billion either side of this, £0-4 billion).
NS&I’s latest forecast – released today – is that it expects to exceed its target range this year and d eliver £4.5 billion of Net Financing. NS&I has therefore decreased the rate on the Direct Saver to moderate the level of deposits into this account.
Jane Platt, Chief Executive, NS&I, said:
“Since November we have seen an increase in customer deposits. This has been driven by a relatively small number of savers depositing large amounts of money, particularly into our Direct Saver account. We have also seen a decrease in the number of customers withdrawing their money from products across our range.
“Reducing the rate on Direct Saver was a very difficult decision. However, we have to take action to try and moderate the level of deposits into this account over the coming months.”
Quarter 3 2011-12 results (October-December 2011)
- Gross inflows (unaudited) for the quarter were just under £4 billion, bringing the year-to-date total to £14.8 billion.
- Net Financing for the quarter was £0.2 billion, bringing the year-to-date total to £4.8 billion. NS&I’s latest Net Financing forecast for 2011-12 is £4.5 billion.
- NS&I delivered £70 million of savings to the taxpayer in Q3 2011-12 – measured by the Value Indicator.
| Quarter / year | Gross inflows | C&AIP* | Gross outflows | Net Financing | Total stock | Value indicator (VI) / Value add (VA) |
|---|---|---|---|---|---|---|
| Q3 2011-12 | 3.9 | 0.8 | 4.5 | 0.2 | 103.7 | 0.07 (VI) |
| Q2 2011-12 | 4.3 | 0.4 | 4.0 | 0.7 | 103.5 | 0.1 (VI) |
| Q1 2011-12 | 6.6 | 0.9 | 3.6 | 3.9 | 102.8 | 0.2 (VI) |
| 2010-11 | 15.3 | 2.7 | 17.9 | 0.1 | 98.9 | 0.8 (VI) |
| 2009-10 | 18.1 | 1.9 | 18.4 | 1.6 | 98.8 | 1.4 (VA) |
| 2008-09 | 26.0 | 32.5 | 16.1 | 12.4 | 97.2 | 0.2 (VI) (to the end of Q3 when the Value add target was suspended) |
*Capitalised and accrued interest and prizes earned.
All figures are in £ billion. 2011-12 figures only are unaudited and subject to change due to late transaction processing (evidence of identity), cancellation and any accounting adjustments.
NS&I reports quarterly on gross inflows and outflows, Net Financing and total stock. Each quarter NS&I issues these unaudited figures, and publishes its Annual Report and audited accounts each financial year.
| Product | Rate p.a. (change in brackets) | AER2 |
|---|---|---|
| Direct Saver | 1.50% (-0.25%) (gross rate 1) | 1.50% |
1. Gross means the taxable rate of interest without the deduction of UK Income Tax
2. AER stands for Annual Equivalent Rate and enables the comparison of interest rates from different financial institutions and across different products on a like-for-like basis. It shows what the notional annual rate would be if interest was compounded each time it was credited or paid out. Where interest is credited once a year the rate quoted and the AER will be the same.
Notes to Editors
- Net Financing – the measure of the net change of NS&I funds, meaning total inflows from deposits, retention of maturing monies and capitalised and accrued interest, less the total outflows from withdrawals and interest or Premium Bond prize draw payments. A positive Net Financing figure represents a positive contribution to government financing.
- Value Indicator – a measure of NS&I’s cost-effectiveness in raising finance for the Government which compares the total cost of delivering Net Financing and servicing existing customers’ deposits with how much it would cost the Government to raise funds through the wholesale market via equivalent maturity gilts and Treasury Bills.
- Information on the Direct Saver account can be found here