A growth of 95% in the number of new Pioneer Savings plans was registered in the first quarter of this year.

In the beginning of 2014, there will be conditions for the faster reduction of interest rates on loans and deposits. This statement was made by Kristofor Pavlov, Chief Economist of UniCredit Bulbank, during the conference entitled “The Sound of Money“, organized by Profit.bg. According to him, the growth of bad credit will have either stopped or the moment when this happens will be very close right about the beginning of next year. Furthermore, a few important events for the banking system will have already become a fact. Among them will be the completion of the process of absorption of the losses resulting from the credit boom of 2005 – 2009, and the approaching end of the Greek saga.

“In the beginning of 2014, Greece will stop affecting, or at least it will affect to a much smaller extent the assessment of the level of economic uncertainty and risk, associated with the Balkan region, and Bulgaria in particular, where Greek banks have a significant presence“, commented Kristofor Pavlov. He believes that when the worries, related to Greece, begin to fade away, Bulgaria will to a greater extent be able to take advantage of its good macroeconomic indicators and the condition of its public finances. Currently, Bulgaria emits public debt at levels, which are just slightly better than those at which Spain or Italy do that.

“Albeit rather incrementally, this will change in the next few years, and with it the price at which Bulgarian companies from the real economy receive debt funding from external sources will also change“, the Chief Economist of UniCredit Bulbank also explained. According to Kristofor Pavlov, these processes will create the necessary conditions for the gradual recovery of domestic demand, the reduction in the risk assessments and of the feeling of uncertainty.

The analysis of the economic team of UniCredit Bulbank showed that in 2014 the price of loans for households and small companies will reach a value of around 9.60% annual average, compared to a value of 10.55%, reported for 2011. The expectations for this and the next year are respectively 10.34% and 10.10%.

“The decline in the price of corporate loans will be significantly smaller, since the interest rates are already at rather low levels, if we take into account the risk, which banks face in this segment“, Kristofor Pavlov said. The forecast is for the price of corporate loans not to fall below 7.40% annual average for the entire 2014, compared to 7.64% for the first quarter of this year.

As a whole, the expectations for the next year and a half – two years are for the rate with which interest rates are to go down, both for deposits and loans, to remain rather low. The reason for this is the continuing crisis of government debts in the Eurozone and in Greece, in particular. According to Kristofor Pavlov, by the end of the current year, as well as during the next year, interest rates for deposits and loans will go down by about 10 bps on annual basis.

Apart from investment in deposits, during the conference there were also discussions about the preservation of the value of money over time besides using deposits – investment in mutual funds. Yavor Achev, Manager for Bulgaria of Pioneer Investments, who provided an example of realized yield of 70% over the last three years, due to the well-diversified portfolio, which consists of 10% funds in the money market, 40% funds in bonds and 50% funds in shares. He made it clear, however, that the yield cannot be guaranteed in advance.

“In the last year, the funds industry responded to the challenges in the environment with new funds, which protect the invested capital, new products, lower fees, etc.“, Yavor Achev commented. According to him, the savings plan deserves particular attention as a product, which allows for investing with small monthly installments, and thus not only makes investment accessible, but also brings prices of the purchased shares closer to the average, which provides for maximum opportunity for profit in a subsequent market growth.

During the first quarter of this year, 1196 new customers have chosen to invest their funds in a Pioneer Savings plan. This is a growth of 95% compared to the same period of 2011, and the total number of savings plans came close to 10000.

More information for media:

UniCredit Bulbank, Identity & Communications Department

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

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