Deposit growth in Bulgaria to outstrip rise in credit market
Bank deposits in Bulgaria will grow at an average rate of 6.3% in 2010 and 2011, outpacing the increase in loans, UniCredit Group predicted in its latest report on household wealth in Central and Eastern Europe (CEE) focused on Bulgaria.
The forecast was presented on Thursday by Milen Kasabov, senior economist at UniCredit Bulbank, the local unit of the Italian group.
But whatever the growth pace for both assets and liabilities, it will fall far short of the buoyant levels recorded between 2000 and 2007, when they surged by an average of 30% and 54%, respectively.
The median annual rise over the next two years is seen at 5.3% for mortgages and -0.5% for consumer loans.
Deposits are continuing to pull of relatively handsome growth rates as a share of households’ financial assets thanks to juicy returns. In the next two years, the are expected to retain their high share of nearly three-fourths of financial assets.
At 87% of the total, real estate makes up the vast bulk of household wealth in Bulgaria.
Kasabov said the share, which is much higher than for developed countries, could be attributed to a tradition in investment and saving for homes plus very underdeveloped capital markets and a very short supply of alternative forms of saving and investment.
The assets of Bulgarian households shrank by 6.5% in 2008, the report said.
In terms of liabilities, mortgages are continuing to eat into the share of consumer loans in the total.
UniCredit Bulbank CEO Levon Hampartzoumian said before joblessness in Bulgaria can start to ease off, there could be one or two more quarters of loan defaults. They spoke for roughly 10% of the combined portfolio as at end November 2009.
Text source: dnevnik.bg
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