There is no crisis for the classical financial instruments! For example, the eternal and most popular financial rule that money attracts money, finds its scientific confirmation in the data provided by the Bulgarian Central Bank. In this case – for citizens’ savings in banks.
The information gathered by BNB on the status of deposits and accounts in banks in the first quarter of 2012 showed some interesting facts and relationships. For example, the number of deposits of citizens hit 12.31 million and the overall deposited sum reached y have a total BGN31.62 billion. For the first time in a long time the number of savings accounts has been reduced – by 246,000 over a period of three months, but the money in these accounts has increased by BGN865 million. The explanation is that larger deposits are growing. This is illustrated by the analysis of
the structure of deposits.
Most of the savings accounts are small deposits – up to BGN5000. These accounts are 10.97 million in number for the entire banking system and at the end of March 2012 they kept a total of BGN5.29 billion. Comparisons show that for the first three months of the year the number of small deposits fell by 340,000, while the total financial resource deposited there dropped by BGN 6.6 million. This was due to two factors. The first is that people with smaller incomes have already started withdrawing sums from banks to meet their current financial needs. The second is that many people who have two or three deposits, of say BGN1000-2000, combined them into one, because in many banks a greater amount of the deposit carries a higher interest rate. The unwelcome fact, however, remains that regardless of what the financial flows are, small deposits are decreasing.
But this is not that tremendously worrisome, because
the backbone of savings
is formed of deposits between BGN5,000 and BGN50,000. They are not so much in numbers – 1.17 million but account for nearly half the money deposited in the banks by citizens – about BGN15.95 billion. Obviously, people with higher incomes tend to save more pennies for a rainy day because the deposits between BGN5000 and BGN50,000 in the first three months of the year rose by 200 thousand units, and the amount they hold increased by about BGN340 million. This result is not due to higher incomes, but- to the fear of the unknown. Almost no one can be sure if the chance to lose one’s job is entirely out of sight – even if one works well] the other fear is that one may be required urgently to spend money on treatment. Rather than borrow to buy a home or a car, the middle class (as far as it exists in Bulgaria) prefers to save. Put in a professional language, people increase current liquidity of their households.
Some bankers believe that the growth of this particular group of deposits is the key to preserving stability in the banking sector. If they began to decline, following the trend with the smaller savings, than this would be a very disturbing sign.
There has been growth in
six-figure deposits.
There are about 87,000 accounts in which citizens hold between BGN 100 thousand and BGN 1 million. Accumulated sums there are about BGN 9 billion. Bankers say that most of these savings belong to people who have sold their properties or have great rental income or high equity shares. Before the crisis, this group was particularly active in business development, but since the end of 2009 it has began to convert into cash those properties that bring low income and carry expenses.
Deposits of over BGN1 million are 558.
This is the number of individuals with savings in banks of at least 1 million. However, some of them may have two or three accounts with over a million in each, but the statistics of the Central Bank is silent on this issue.
The ones who have a lot of money, still have an incentive to invest part of it in Bulgarian banks because interests on deposits received by individuals do are not taxed in Bulgaria. This is one of the few bonuses for Bulgarian savers compared to the citizens of most other EU countries.
Another interesting point is that people who have millions in BGN, EUR and USD are
absolutely indifferent to the appeals of the ruling circles
for greater economic activity – in the form of new investments, use of loans and more purchases. Nobody can force people to believe in the governing and managerial skills of the government so as to put their money into investments with unpredictable returns.
Credits, even when linked to business development, bear costs for years to come, and future income from an investment is too uncertain, given the current situation of the Bulgarian economy and uncertain prospects before it. While the accumulated deposit amounts are both easily accessible and bear decent and secure income. Bank statistics show that it is the holders of deposits for millions who are fully aware of these dependencies.
As mentioned, credit institutions in the country list 558 deposits of more than BGN 1 million. In some of them, of course, there is much more money because the total amount of funds held there is BGN 1.34 billion. More curious is that the overall amount is by BGN 130 million greater than the same period last year.
At the expense of that, loans over BGN 1 million extended to individuals and households are only 111, and the total amount is BGN 225.76 million while for one year it has risen only BGN 14.7 million.
Financial managers complain that it is the most solvent people in the country are very conservative in taking new loans and are unwilling to increase their indebtedness. Which means only one thing – people who see good prospects for business development in Bulgaria under the current government are a minority.
nbsp;
