Unicredit Bulbank AD: Savings will continue to grow, albeit at a slower rate

Personal savings will continue to grow in 2013, albeit at a slower rate than the previous year, analysts at Unicredit Bulbank AD said in a report. The trend could be somewhat affected by the introduction of a tax on income from deposit interest rates. However, the tax is unlikely to turn individuals and households away from retail deposits, since they will remain the safest and relatively high-yielding saving instrument, according to the bank.   

Households are likely to remain cautious in their financial decisions given the high unemployment rate, sluggish income growth, small pensions and high food prices, the report said. Although the high interest rates on retail deposits of the last few years are a thing of the past, a dramatic rate cut in the first couple of months of the new year is a very distant possibility. The more likely trend is a gradual decrease towards pre-crisis levels. Still, one-off advantageous offers and campaigns by some banks can be expected.   

Personal savings have grown by nearly BGN 2.5 bn., or 8%, in the first 10 months of 2012, which is an increase of 12.7% over the same period of 2011. Despite the accumulation of savings the living standard of most Bulgarians can hardly be viewed as improving, the bank said. The average household in the country has only modest deposits – 75% of all deposits are under BGN 1,000. 

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