The net financial wealth of CEE households has more than doubled since 2004; in 2013 it reached around EUR 780 billion. Nevertheless, CEE households´ net financial wealth in terms of GDP is on average still roughly ¼ of that of major developed countries, showing significant scope for further convergence towards Western Europe. This was one of the main conclusions from the latest analysis by UniCredit on the CEE region, presented at the Annual meeting of the European Bank for Reconstruction and Development in Warsaw.

The global financial crisis in 2008 / 2009, and to a lower extent the European sovereign debt crisis in 2011, caused, however, a temporary fall in financial wealth mainly due to losses in capital markets, as well as due to a change in the composition of financial assets. For comparison, the net financial wealth of households in Austria, Germany and Italy amounted to EUR 6,800 billion in 2013.

In general, the financial penetration gap between CEE countries and more developed markets is primarily visible on the assets´ rather than on the liabilities´ side.

“Going forward, the convergence of CEE households´ net financial wealth towards Western European standards will gradually continue and mainly be driven by an acceleration of savings and investments”, said Gianni Franco Papa, Head of CEE Division at UniCredit.

There is some shift towards more sophisticated products, but cash assets remain dominant. Looking at the composition of financial assets, ‘cash assets’ which comprise currency and bank deposits, have a dominant share. As a consequence of the global financial crisis 2008 / 2009 CEE households have reallocated significant parts of their capital to cash assets. Subsequently, they have started to gradually shift towards mutual and pension funds, as well as towards insurance products. This shows increased confidence and a more long-term orientation when it comes to investments.

Bulgaria - leader in terms of deposits

In 2013 almost 82% of the financial assets of Bulgarian households were in the form of bank deposits and cash assets, and 16% were invested in mutual and pension funds, as well as in insurance products. At the same time only 2% of the assets of Bulgarian households were invested in securities. The country ranks among the first in terms of the percentage of deposits in the total financial wealth of CEE households. This percentage is higher only in Turkey (further information available on slide 4 of the presentation attached).

For comparison, 38% of the financial assets of the households in Austria, Germany and Italy are managed by mutual and pension funds, and 25% of the assets are directly invested in capital markets.

The moderate shift of the households' assets towards mutual and pension funds will continue over the next years”, outlined Carmelina Carluzzo, Deputy Head of CEE Strategic Analysis at UniCredit. Nevertheless, according to her, cash assets will remain the dominant asset class also compared to securities and shares, with some differentiation across countries. Still, the increase in the managed funds will diversify households' portfolios and will encourage the development of local capital markets.

Housing loans outpace consumer loans.

“On the liabilities side, despite cross country differentiation, housing loans grew generally faster than consumer loans in the most recent years”, stated Gianni Franco Papa. He expects this trend to persist in the CEE region.

From 2004 to 2008 housing loans grew by an annual rate of 37.8 %, while for the period 2008 - 2013 the rate was 8.2 %. For comparison, for the periods 2004-2008 and 2008-2013 the annual growth rates of customer loans were respectively 31.6% and 0.8%. Last year housing loans reached 57% of total financial liabilities of CEE households (this data excludes Russia and Turkey).

Total financial liabilities made up for around 20% of the regional GDP in CEE in 2013, while the portion was 59 % in Austria, Germany and Italy. By contrast, total financial assets came to around 45% of the regional GDP in CEE and 207% in Austria, Germany and Italy.

Banks will remain important financial intermediaries

According to UniCredit's analysis, households are still relying on traditional banking products. For this reason banks will continue to be key financial intermediaries in Central and Eastern Europe.

“There is room for banks to enhance their role as financial advisors for CEE households”, summarized Carmelina Carluzzo. According to her, this would allow households to find the individually right balance between financial investments and loans.

First in Central and Eastern Europe

Despite several challenges, UniCredit considers CEE still its ‘engine for growth’ and remains a committed long-term investor in the region. The Group runs an extensive network with nearly 3,600 branches in 14 countries, which generates around 30% of UniCredit's revenues. Through its International Centers UniCredit serves more than 19,000 international customers operating in CEE. By its expertise in political contexts, local regulations and market practices, UniCredit supports its customers in the development of their business.

“Over the last two years we have acquired about 1 million new retail customers in Central and Eastern Europe”, explained Gianni Franco Papa, Head of CEE Division at UniCredit. “In order to perpetuate this positive trend we put currently a lot of effort into the seamless integration of the real and the virtual world and into transforming our business towards a truly multi-channel banking.” UniCredit applies a customer-focused approach, establishes sustainable relations, and strives for the development of innovation and new technologies.

UniCredit:

UniCredit is a leading European commercial bank with strong roots in 17 countries. Our overall global network covers approximately 50 markets with nearly 9,000 branches and more than 147,000 employees (as of 31 December 2013).

In the CEE Region, UniCredit runs the largest and most diversified international banking network with approximately 3,600 branches.

The Group operates in Austria, Azerbaijan, Bosnia and Herzegovina, Bulgaria, Croatia, the Czech Republic, Germany, Hungary, Italy, Poland, Romania, Russia, Serbia, Slovakia, Slovenia, Turkey and Ukraine (as of 31 December 2013).

More information for clients:

UniCredit Bulbank, Call Centre

Phone: 0700 1 84 84

More information for media:

UniCredit Bulbank, Identity & Communications Department

Viktoria Blajeva, Phone: + 359 2 9264 993, wjlj/ebwjepwbAvojdsfejuhspvq/ch

Ekaterina Ancheva, Phone: + 359 2 9264 963, flbufsjob/bodifwbAvojdsfejuhspvq/ch

Magdalena Ivanova, Phone: + 359 2 9232 528, nbhebmfob/jwbopwbAvojdsfejuhspvq/ch