Household debt decreased by BGN 270 million and the indebtedness ratio fell to 49%.

Household financial wealth grows by 12% on an annual basis reaching nearly BGN 41.8 billion in the end of June 2012. These are the findings of the latest quarterly analysis of household wealth and debt in Bulgaria, made by UniCredit Bulbank’s team of analysts. The increase of financial assets by around BGN 945 million in the second quarter was determined mainly by bank deposits. Household savings in banks swelled by 14% for a year and by 30 June amounted to BGN 32.4 billion.

Savings in pension funds increased by BGN 196 million in the second quarter thanks to the mandatory contributions and reached slightly more than BGN 5 billion. Life insurance reserves once again contributed to the growth of household wealth. They reached BGN 628 billion which is an increase of nearly 14% for a year. There was a downturn in the investments directly related to the local financial market. Investments in shares decreased by BGN 140 million and Special Purpose Vehicles (SPV) – by BGN 21.

„In general, in the second quarter households increased the pace of recovery of their overall financial position,” said Milen Kassabov, senior economist at UniCredit Bulbank. He also concluded that the growth of financial wealth accelerates while debt levels fall at a faster pace. Thus, the ratio measuring indebtedness (debt against financial assets) fell to 49%.

VOLUMES (in BGN billion)	2011	2012
Mar	Jun	Sep	Dec	Mar	Jun
Housing wealth	215.731	212.532	210.948	207.979	207.273	207.771
Financial wealth	36.746	37.313	38.208	39.960	40.834	41.778
Debt	20.724	20.792	20.783	20.735	20.539	20.521
Total net household wealth	231.753	229.054	228.374	227.204	227.568	229.028

The total net household wealth as of 30 June 2012 amounts to BGN 229 billion. For the sake of comparison a year ago its value was almost the same, however, growth has been registered for a second quarter in a row. This is the result of the growth of financial assets compared to the decrease in housing property.

The total volume of mortgage loans has decreased by 0.5% on an annual basis over the second quarter of this year reaching over BGN 9.3 billion. The mortgage loans provided from non-banking financial institutions shrank by 12% up to BGN 566 million as of the end of June 2012. Mortgage loans from banks have also decreased by BGN 27 million for the last year. Towards the end of the second quarter their volume is equal to BGN 8.8 billion.

FINANCIAL ASSETS OF HOUSEHOLDS	2011	2012
Mar	Jun	Sep	Dec	Mar	Jun
1 Currency	1705.8	1743.5	1844.7	1948.3	1862.9	1919.0
2 Deposits	27917.5	28421.6	29460.6	30887.3	31621.7	32431.7
2a LC deposits	13289.2	13566.8	14252.5	15549.7	16380.3	16996.7
2b FX deposits	14628.3	14854.8	15208.1	15337.6	15241.4	15435.1
3 Securities other than shares	108.7	103.9	109.5	107.9	110.1	123.3
3a Government securities	38.2	41.5	43.4	45.7	45.9	47.5
3b Bonds (incl. mortgage bonds)	7.0	4.7	6.9	6.8	2.5	2.4
3c Compensatory notes	63.5	57.7	59.2	55.5	61.7	73.4
4 Quoted shares	1340.3	1216.4	944.5	867.9	757.5	617.8
5 Mutual funds	416.0	396.7	363.6	369.2	359.4	341.0
5a Open-end (managed in Bulgaria)	125.2	119.7	108.8	102.0	101.5	102.5
5b Closed-end	155.4	153.3	147.5	154.4	138.8	118.2
5c Open-end (managed abroad)	135.4	123.7	107.4	112.8	119.1	120.3
6 Insurance technical reserves; pension funds	5257.6	5430.9	5485.5	5779.4	6122.0	6345.6
6a Life insurance	527.6	552.3	565.8	584.9	604.0	628.2
6b Pension funds	4115.0	4280.0	4331.9	4572.7	4871.5	5068.0
6c Prepayments of insurance premiums and reserves for outstanding claims	615.0	598.6	587.7	621.8	646.5	649.5
7 Financial assets (1+2+3+4+5+6)	36745.8	37313.0	38208.3	39960.0	40833.6	41778.5

„The pressure on the mortgage loan market may continue in the following quarters as a result of the steadily weak housing market and possible write-offs,” considers Milen Kassabov.

Household debt decreased by 1.3% on an annual basis reaching BGN 20.5 billion and slowdown rates were even more rapid compared to the previous quarter. Thus, the share decreased by BGN 270 million over the last year alone.

Consumer loans from non-banking financial institutions remained weak as in the first quarter reversing the positive trend of last year. They amount to BGN 838.3 million and thus decreased by BGN 14 million compared to the first three months of 2012. Consumer loans from banks continued to decrease slowly and the decrease in loans in BGN was almost counterbalanced by the growth of those in EUR. As of 30 June banks extended consumer loans amounting to BGN 7.4 billion, registering a decrease of nearly 2% for one year.

Overdrafts (including credit cards) also continued to decrease considerably and already amount to BGN 148 million less compared to a year earlier. According to UniCredit Bulbank’s report the lack of appetite for consumer loans may mean a steady weakness in domestic consumer demand. Other loans both from banks and from non-banking institutions (agricultural, trainings-related and other loans) increased both on a quarterly and on an annual basis while leasing contracts (mainly related to the purchase of cars) slightly increased for the first time following the long and strong decrease which started in 2009. Nevertheless, leasing contracts still register a decrease of 15% on an annual basis. The analysts of the bank consider that this might mean that a temporary weakness has been reached while a more significant and sustainable growth in demand is not very likely.

FINANCIAL LIABILITIES OF HOUSEHOLDS	2011	2012
Mar	Jun	Sep	Dec	Mar	Jun
1 Mortgage loans	9333.3	9408.6	9424.9	9428.2	9374.5	9359.0
1a Mortgage loans of MFI	8715.6	8765.8	8793.3	8807.7	8765.7	8792.5
1a1 Mortgage loans, local currency	3868.5	3802.2	3748.0	3694.5	3640.5	3644.8
1a2 Mortgage loans, foreign currency	4847.2	4963.6	5045.2	5113.1	5125.1	5147.6
1b Mortgage loans of other FI	617.6	642.8	631.7	620.6	608.9	566.5
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	11084.5	11086.0	11075.4	11047.5	10920.7	10908.9
2a Consumer loans of MFI	7532.2	7577.5	7574.5	7503.6	7437.4	7432.9
2a1 Consumer loans, local currency	6086.1	6015.3	5911.2	5766.5	5644.2	5585.3
2a2 Consumer loans, foreign currency	1446.1	1562.3	1663.3	1737.1	1793.2	1847.6
2b Consumer loans of other FI	778.9	794.5	805.3	858.4	852.3	838.3
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	1781.5	1740.3	1708.5	1639.6	1611.5	1591.8
2c1 Overdraft, local currency	1550.2	1525.3	1498.7	1433.1	1407.3	1389.1
2c2 Overdraft, foreign currency	231.3	214.9	209.8	206.5	204.3	202.7
2d Other loans	893.1	881.2	893.8	948.6	919.3	941.3
2d1 Other loans, local currency	507.6	487.6	493.8	512.5	490.8	508.1
2d2 Other loans, foreign currency	385.5	393.6	400.0	436.1	428.5	433.1
2e Other loans of other FI	98.9	92.4	93.3	97.2	100.1	104.6
2d1 Other loans, local currency	n.a.	n.a.	n.a.	n.a.	n.a.	n.a.
2d2 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	306.2	297.1	282.4	259.0	243.3	253.6
Total Liabilities (1+2+3)	20724.0	20791.7	20782.7	20734.7	20538.6	20521.5

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