Total net household wealth has increased by BGN 365mn reaching BGN 227.56bn in the first quarter of 2012, thus putting a stop on the long series of quarters of reporting a decrease.

Household mortgage loans provided by banks shrunk for the first time on a quarterly basis by BGN 42mn and to the end of March 2012 their amount is BGN 8.76bn. This becomes clear in the last quarterly analysis on household wealth and debt in Bulgaria, prepared by UniCredit Bulbank's team of analysts. Since the mass introduction of this type of loans in the period between 2002 and 2011, they have grown more than 40 times. A substantial growth was reported particularly during the upsurge in the residential real estate market in the period between 2005 and 2008 when mortgage loans grew by BGN 6.7bn. According to UniCredit Bulbank's economists, with the entering in a period of accelerated repayment of a considerable part of these loans, a more significant decrease in the total household debt can be seen.

Residential household wealth for the first quarter of this year amounts to BGN 207.27bn. On an annual basis this is a decrease of 4% and compared to the last three months of 2011 residential wealth has decreased by BGN 706mn.

Household financial assets

VOLUMES (in BGN million)	2010	2011	2012
Dec	Mar	Jun	Sep	Dec	Mar
1 Currency	1839.2	1705.8	1743.5	1844.7	1948.3	1862.9
2 Deposits	27344.6	27917.5	28421.6	29460.6	30887.3	31621.7
2a LC deposits	12823.1	13289.2	13566.8	14252.5	15549.7	16380.3
2b FX deposits	14521.5	14628.3	14854.8	15208.1	15337.6	15241.4
3 Securities other than shares	97.7	108.7	103.9	109.5	107.9	110.1
3a Government securities	43.2	38.2	41.5	43.4	45.7	45.9
3b Bonds (incl. mortgage bonds)	10.6	7.0	4.7	6.9	6.8	2.5
3c Compensatory notes	44.0	63.5	57.7	59.2	55.5	61.7
4 Quoted shares	1153.1	1340.3	1216.4	944.5	867.9	757.5
5 Mutual funds	444.1	416.0	396.7	363.6	369.2	359.4
5a Open-end (managed in Bulgaria)	112.1	125.2	119.7	108.8	102.0	101.5
5b Closed-end	149.0	155.4	153.3	147.5	154.4	138.8
5c Open-end (managed abroad)	183.0	135.4	123.7	107.4	112.8	119.1
Insurance technical reserves; pension funds	5113.3	5257.6	5430.9	5485.5	5777.5	6122.0
6a Life insurance	514.6	527.6	552.1	565.5	584.7	603.8
6b Pension funds	3987.4	4115.0	4280.0	4331.9	4572.7	4871.5
6c Prepayments of insurance premiums and reserves for outstanding claims	611.3	615.1	598.7	588.1	620.0	646.8
7 Financial assets (1+2+3+4+5+6)	35992.0	36745.8	37313.0	38208.3	39958.1	40833.6

Loans related to consumption in the first quarter of this year have shrunk by BGN 126.8mn compared to the last three months of 2011, thus already reaching BGN 10.9bn. This is a decrease for a tenth consecutive quarter. Financial lease also marks a decrease of more than 20% on an annual basis because of the continuing weak interest in vehicle purchasing.

Household debt overall is decreasing at the end of March by BGN 196mn down to BGN 20.5bn. On an annual basis the decrease is almost the same – by BGN 185mn. As a result the total net household wealth increased by BGN 365mn reaching BGN 227.56bn in the first quarter of 2012, thus putting a stop on the long series of quarters in which we saw a decrease. According to UniCredit Bulbank's team of economists, however, this does not mean that we can speak of a sustainable turnaround.

„The continuing decreasing of the household debt and the expectations that the shrinking of the total household wealth will persist will make the households remain cautious when it comes to making financial and consumer decisions in the next few years“, commented Milen Kasabov, Senior Economist at UniCredit Bulbank. According to him, the behaviour of the households is significantly influenced by the witnessed strong volatilities in the residential real estate market coupled with the fast accumulation of debt a few years ago.

Household debt

VOLUMES (in BGN million)	2010	2011	2012
Dec	Mar	Jun	Sep	Dec	Mar
1 Mortgage loans	9349.1	9333.3	9408.6	9424.9	9428.2	9374.5
1a Mortgage loans of MFI	8709.4	8715.6	8765.8	8793.3	8807.7	8765.7
1a1 Mortgage loans, local currency	3932.1	3868.5	3802.2	3748.0	3694.5	3640.5
1a2 Mortgage loans, foreign currency	4777.3	4847.2	4963.6	5045.2	5113.1	5125.1
1b Mortgage loans of other FI	639.7	617.6	642.8	631.7	620.6	608.9
1b1 Mortgage loans, local currency	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.
1b2 Mortgage loans, foreign currency	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.
2 Consumption loans	11164.0	11084.5	11086.0	11075.4	11047.5	10920.7
2a Consumer loans of MFI	7554.3	7532.2	7577.5	7574.5	7503.6	7437.4
2a1 Consumer loans, local currency	6175.7	6086.1	6015.3	5911.2	5766.5	5644.2
2a2 Consumer loans, foreign currency	1378.6	1446.1	1562.3	1663.3	1737.1	1793.2
2b Consumer loans of other FI	786.5	778.9	794.5	805.3	858.4	852.3
2b1 Consumer loans, local currency	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.
2b2 Consumer loans, foreign currency	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.
2c Overdraft	1810.9	1781.5	1740.3	1708.5	1639.6	1611.5
2c1 Overdraft, local currency	1578.1	1550.2	1525.3	1498.7	1433.1	1407.3
2c2 Overdraft, foreign currency	232.9	231.3	214.9	209.8	206.5	204.3
2d Other loans	909.3	893.1	881.2	893.8	948.6	919.3
2d1 Other loans, local currency	526.1	507.6	487.6	493.8	512.5	490.8
2d2 Other loans, foreign currency	383.2	385.5	393.6	400.0	436.1	428.5
2e Other loans of other FI	103.0	98.9	92.4	93.3	97.2	100.1
2e1 Other loans, local currency	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.
2e2 Other loans, foreign currency	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.
2f Revolving credit cards (non-bank)	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.
3 Financial leasing and hire purchase agreements	335.9	306.2	297.1	282.4	259.0	243.3
Total Liabilities (1+2+3)	20849.1	20724.0	20791.7	20782.7	20734.7	20538.6

In spite of the dominating role of the residential properties in the total household wealth, the financial wealth has significantly increased its importance over the last few years, thus changing seriously the total wealth structure. This trend may persist in the next few years according to UniCredit Bulbank's economists. The ratio between gross residential and gross financial wealth reached its peak in 2008 when residential wealth was 10 times higher. Since then a rapid change has been observed and the ratio decreased twice, already being 5 times higher in favor of the residential properties at the end of March this year. In terms of value the residential wealth decreased by BGN 105bn, or almost 30%, in the period between the end of 2008 and 2001, while at the same time the financial wealth grew by more than BGN 10bn.

Household deposits at the end of March reached BGN 31.6bn, which represents an increase by more than BGN 734mn for three months.

„The preference for savings in bank deposits, mainly in BGN as of recently, was confirmed in the last quarter“, also explained Milen Kasabov. For one year BGN deposits have grown by 23%, reaching BGN 16.38bn.

Investments in instruments related to the internal capital markets continued shrinking in the last quarter as the funds in shares decreased by BGN 110mn – a decrease by 43% for the year, reaching BGN 757.5mn. The investments in collective investment schemes are also shrinking. To the end of March 2012 the assets of mutual funds are BGN 359.4mn, decreasing by BGN 9.8mn for a period of three months.

Total household wealth (residential and financial)

VOLUMES (in BGN billion)	2010	2011	2012
Dec	Mar	Jun	Sep	Dec	Mar
Value of real estate owned	220.635	215.731	212.532	210.948	207.979	207.273
Gross financial wealth	35.992	36.746	37.313	38.208	39.958	40.834
Debt	20.849	20.724	20.792	20.783	20.735	20.539
Total net household wealth	235.778	231.753	229.054	228.374	227.202	227.568

The less investments in shares and mutual funds are due to declines in prices as well to withdrawing funds from the market, as it becomes clear in the report of UniCredit Bulbank. At the same time, however, the funds of the households in life insurance schemes and pension funds continued showing a solid two-digit growth on an annual basis supported by the strong performance of the international financial markets. The growth in life insurance schemes and pension funds is respectively 14% and 18%. According to the bank's economists, however, in the current quarter as well as in the future ones these assets will be vulnerable because of the adverse trends in the capital markets.

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