05.10.2021
UNICREDIT BULBANK: LOW INTEREST RATES WILL REMAIN IN THE MEDIUM TERM
Despite rising inflation, banks expect low interest rates to remain low in the medium term. Tsvetanka Mincheva, Chairman of the Management Board and Chief Executive Officer of UniCredit Bulbank, commented on this at a meeting with journalists.
She pointed out that the pressure of rising prices provoked people to look for alternative investments, and more and more often these are savings structured products. Mincheva believes that due to the low yield on deposits, such investments are made.
"Since 2003, Pioneer funds have been offering their products through UniCredit Bulbank, and while in the beginning there was a minimum number of customers, last year their growth was 40%, and the amounts invested increased by 60%," she added.
Mincheva believes that a serious market for investment products has opened up and many investors are participating with small amounts, looking for options for medium-term and long-term investment.
Interest rate policy
According to her, the trend towards negative interest rates on deposits with individuals will not affect people whose savings are up to the guaranteed amount of BGN 196,000. She explained that the costs of the banks are related to the part that is above the guaranteed one, because it is the attracted deposits above the guaranteed level that make the banks super liquid, and the storage of money is related to the costs for them.
Mincheva is adamant that the Covid portfolio has responded steadily and sustainably, with expectations worse, but many borrowers are returning to normal levels of loan service.
Tsvetanka Mincheva confirmed that the banks are implementing measures in time.
"Those in the risk group are companies that, given the low base levels, take loans on the verge of return," she revealed, but is adamant that with the created credit models in a competitive environment, quality customers are eliminated.
According to her, the risk assessment methodology, especially in consumer lending, is being applied very carefully. Mincheva shared another impression that mortgages in Bulgaria and Central and Eastern Europe are developing at a good pace, with a better standard of living for more people to get their own homes.
Climate economy
"The transition to a new type of economy will not be easy, and for some industries it will probably be quite difficult. The regulations will become more and more and the business will have to adapt its activity to the new conditions ", pointed out Tsvetanka Mincheva.
She reminded that sustainable development goes through an assessment of the impact of business on the environment and clear indicators of what is acceptable and what is not.
"Our role as leading companies is to make this transition fair. We must not allow harm to people or companies, but together find a solution on how best to transform into more environmentally friendly solutions," said Mincheva.
According to her, banks and financial institutions are players in the economy that support this approach, especially since regulators require proactive action and will face a climate stress test by the end of next year.
Lenders must be prepared with data on how their balance sheets will be presented by 2050, and this affects the capital requirements, which will also reflect on the requirements for customers.
"Our role is important to have new valuation models - we will offer solutions to customers, and we will transform," said Mincheva.
She confirmed that for UniCredit Bulbank it is a priority to support clients and partners in their transition to sustainable business with a clear ESG strategy (for environmental, social and management practices - ed. note).
"We are ready to be with them when working with regulators, to share the risk, to look for different funding instruments, to encourage innovation. But we must be convinced that in the long run the company will have a real positive contribution to natural and social capital," said Tsvetanka Mincheva.
Strategic priorities
According to her, the first thing that is crucial for the banking sector is the speed of changing consumer habits and expectations, which is becoming faster in the market of new solutions.
The banker warned that anyone who failed to move with it would lose their competitive position.
"The second thing we should definitely point out when we talk about the development of the banking sector, of course, is the role of digitalization. The speed of change is important for the banks and those who will not adapt are doomed to failure," said Mincheva.
She said that over 90% of products and services can now be purchased remotely - via the Internet or telephone.
"This year we have a growth of 30% of mobile banking users and a 50% growth in the number of transfers - not only more customers use our mobile banking application, but they are also increasingly active," said the banker.
Mincheva is convinced that digitalization is an indisputable trend in the future of banking, but only in combination with the human factor.
"Therefore, the main focus for me in my new role is to make the bank a preferred place to work," commented the new CEO of UniCredit Bulbank.
Mincheva is of the opinion that business has its role to make Bulgaria a more attractive place for young people.
"According to economists, the demographic picture in the country is one of the most serious obstacles to economic development. The population of our country is decreasing by 50 thousand per year and this certainly puts everyone at risk of lack of skilled labor. Therefore, the only solution is to try to attract back the young people who have gone abroad by offering attractive conditions for work and development of professionals," said the banker.
