In 2016 deposits were continuously increasing, while deposit interest rates — were decreasing

In 2016 there was a continuing upward tendency for deposits to increase, which led to higher liquidity of the banking system. There was also a continuing decrease in interest rates influenced by the policy of the European Central Bank (ECB). These are the conclusions of Retail Banking Division of UniCredit Bulbank concerning the deposit market in Bulgaria on the basis of its own data and the statistics of the Bulgarian National Bank (BNB).                                             

The ECB has implemented a negative interest rate since June 2016, while at the end of 2015 the Bulgarian National Bank adopted а new version of Ordinance No. 21 which also implemented а negative interest rate. According to bank experts these regulations play an important role in decreasing deposit interest rates in the Bulgarian banking system.

In 2016 household deposits rose by 1.8% compared to the same period in 2015, while the general increase of deposits was 7.2% according to the statistics of BNB. Since the beginning of 2016 interest rates on fixed-term deposits had decreased by 0.6%, while in October 2016 the average households’ interest rate was 0.63%. „We expect this tendency towards a decrease to remain unchanged”, was the forecast of Krum Aleksiev, Head of Marketing and Segments Department of UniCredit Bulbank.

Since the beginning of the year the clients of UniCredit Bulbank had increased their deposit rate by 11%. The market share of the bank increased by 0.5%, reaching 15.6% as of October.

According to UniCredit Bulbank there was an increase in the average amount of savings – BGN 5,400 compared to BGN 4,900 in 2015. Clients demonstrate a preference for deposits with short maturity. Another trend on the deposits market is that the volume of savings in BGN is increasing compared to the same volume in foreign currency.

„In search of better profitability  depositors are increasingly changing their traditional way of thinking in case of long-term savings, searching for more rational solutions for their funds”, Aleksiev commented. UniCredit Bulbank offers its current and future clients a full range of products with the aim of a better diversification of savings – mutual funds, deposit insurances and pension insurance,  characterized by their long-term nature and moderate risk.

Drastic changes in households’ behavior are not expected next year according to the forecast of Retail Banking Division of UniCredit Bulbank. The rate of savings is expected to remain high despite decreasing deposit interest rates .The same tendency is expected for the liquidity of the banking system. It is recommended that savings be directed to alternative products with higher profitability and a longer investment horizon such as mutual funds, additional retirement benefits and life insurances with a savings component.

Additional media information:

Victoria Blajeva, tel +359 (0) 2 9264 993, wjlj/ebwjepwbAvojdsfejuhspvq/ch

Beatris Nikolova, tel +359 (0) 2 9232 528, cfbusjt/ojlpmpwbAvojdsfejuhspvq/ch