Bulgarians are penny-wise and are anxious to keep some money aside, just in case. However, Bulgarians are also keen on secure and profitable investments. For the average person with an average financial capacity, one suitable solution is a bank deposit. It is secure and guaranteed by a special fund and until recently offered luring interest rates despite the disputable tax imposed on savings. The crisis has acted as an additional incentive for savings, as people refrained from unnecessary spending. The crisis is no longer that frightening but Bulgarians have continued to add to their savings which has brought the sum total of deposits to an impressive amount of 19 billion euros, an increase by 11% on the previous year. This picture is even more remarkable having in mind that most Bulgarians do want to save, but only 33% of them can afford it, as reported by statistics.On average, they manage to save a little over the modest 200 euro per capita annually. Adding the funds of companies, bank savings have reached a record high for this country at 29 billion euro. It is important to specify that the country's GDP for 2013 came to approximately 40 billion euro, i.e. savings in Bulgaria account for 72% of the annual domestic product.

It is interesting to see what banks do with such large amounts of money entrusted to them by citizens and businesses. It seems that they do not keep the cash in their vaults because among other things, it won’t possibly bring any revenue. Judging by the size of loans released by financial institutions, almost all savings have been used for lending to businesses and households and their amount has reached 27 billion against a total of 29 billion in savings. This is probably one of the reasons for the good condition of banks in Bulgaria - they do not keep money in the freeze but rather invest resources to generate income.

Whether this trend of growth of deposits will continue in the future is a question that has no definitive answer following the recent developments in interest rates. While last year the average interest rate on a bank deposit was 3.76%, since the beginning of this year is has come down from this level to the current 3%. This means that deposits have lost their appeal for the population and have on top of that become cheaper for banks who apparently have little appetite for new and fresh financial resources, as they are sufficiently liquid. Experts believe that in the event of a stronger economic growth, the appetite for crediting will resume and banks will have to attract new financial resources by providing higher interests on deposits.

English version: Daniela Konstantinova