Deposits in BGN grow almost four times faster compared to the ones in foreign currency

The value of residential property, acquired with own funds and loans, has decreased by almost BGN 3 billion down to nearly BGN 208 billion over the last three months of last year. This is indicated by the latest quarterly analysis of wealth and household debt in Bulgaria, prepared by the UniCredit Bulbank’s team of analysts. At the same time the net financial wealth of households (debt-adjusted financial assets) jumped by the record figure of BGN 4 billion for the whole of 2011 and by almost BGN 1.8 billion only in the last quarter of the year reaching BGN 19.2 billion.

Bank deposits account for the growth of financial wealth, states the analysis. For the period between September and December 2011 deposits in banks have increased by BGN 1.4 billion reaching nearly BGN 30.9 billion. Calculations show that in the last sixteen quarters deposits significantly grew without proving a direct link to the changes in profitability and inflation levels as is the case with previous years. Yet, the reasons for the great interest in deposits in recent years possibly could include, among others, the transition to more moderate inflation rates and the relatively stable profitability offered by banks. In addition, the lack of any other investment opportunities and the slack residential property market also contribute to the great interest in deposits.

Bank deposits once again registered a two-figure annual growth in the last quarter and towards the end of December their share of all financial assets was 77.3%. Deposits in BGN grew almost four times faster compared to the ones in foreign currency, overtaking the latter, and towards the end of 2011 deposits in BGN amounted to over 15.5 billion. The great increase in savings in local currency is also a result of the higher profitability levels.

Together with the increase in savings the indebtedness of the population continued decreasing. Thus the indebtedness ratio is already below 52% compared to the record level of 71% in the beginning of 2009.

“The indebtedness ratio is expected to decrease reaching around 47% in the end of the current year and to start stabilizing only from 2013”, thinks Milen Kassabov, a senior economist at UniCredit Bulbank. The total household debt from September 2009 to December 2011 decreased by BGN 500 billion down to BGN 20.7 billion. It is indicated by the analysis data that bank debt in foreign currency continues to grow at a good rate whereas the debt in local currency decreased in 2011.

Consumer loans from non-banking financial institutions increase by 9.4% on an annual basis and reach the amount of BGN 860.2 billion. At the same time the share of lease contracts decreased by half compared to its levels of 2008. On an annual basis leasing has shrunk by 23% down to BGN 258.9 billion.

Assets related to the Bulgarian capital market continued to generate loss also in the last quarter of 2011, states the report of UniCredit Bulbank’s team of economists. Investments in shares registered a loss of BGN 285 million for the whole of last year and their share of the total financial assets decreased to record levels of only 2.2%

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