Milka Todorova, Director Small Business Banking in First Investment Bank for "Pari" weekly

Mrs. Todorova, it becomes clear from the last statistical information from BNB that the interest rates of the credits and deposits continue to decrease. First Investment Bank also decreased the interest rates of the consumer credits. Do you expect further decrease of the interest rates?

During the year we observe gradual decrease of all interest rates both in the sphere of deposits and credits. This process is the onset of the difficult and gradual overcoming of the financial crisis in the country. It includes of course many more activities – e.g. stimulating the business activity and making efforts to put funds from European programs to use. A part of the activities are on a governmental level and the state is obliged to fulfill them. Banks as a significant participant in the economic space must also have its share. The decrease of interest rates of the credits is a key element in the process of overcoming the financial crisis. We, in First Investment Bank have begun decreasing the interest rates of the credits as the interest rates of our consumer credits decreased with approximately 2% on an average basis.

What measures should the government undertake?

Most importantly the business activity should be stimulated – then the consumption shall increase. One of the key factors for overcoming the consequences of the economic crisis is increasing the consumption. We have decreased the interest rates of the consumer credits in First Investment Bank namely because we wanted to stimulated the people to consume more goods and services. This will provide an impetus for the production of new products, offering new services and in this way the economy will be stimulated as a whole.

Can you make a prognosis to what levels the interest rates shall be decreased?

It is difficult to make a prognosis because the decrease of interest rates depends on many factors. The measures which the government will undertake are extremely important. In all cases at the end of the year the interest rates shall be 1 – 2% lower than those right now.

What is the current development of consumer crediting?

There is demand for credits. The trend is not like in the period 2006 - 2007, but there is increase in the demand compared to last year. The prices of some goods and services are considerably lower and to a great extend this stimulates the consumption. The decreased interest rates of consumer credits by First Investment Bank are the answer to the needs of our clients.

My expectations are for a moderate growth of crediting in all spheres during this year. I expect equal distribution between mortgage loans, consumer credits and credit cards. The demand for mortgage loans at the moment is smaller because there is lack of many newly built real estates. At the same time however there are many attractive prices of real estates and some people would like to use this opportunity. Credit cards are used more on the market because they give access to funds at any time worldwide. To answer to the expectations of our clients we in First Investment Bank have relieved the conditions for issuing credit cards - the customer can file its request online or turn to the Contact centre of the bank. The client visits the bank branch only once when he/she receives the credit card.

What do you understand by moderate growth of crediting?

The crediting of households and physical persons will increase by 10% to 15%. This growth is normal and corresponds to the market situation. Towards the middle of the year we expect results from the anti - crisis measures of the government that would make us correct this prognosis.

The crediting shall increase but will the growth of bad credits increase as well?

There are many factors influencing the growth of bad credits. One of them is the level of unemployment in the country and I am sure that steps will be undertaken so that it will not keep growing. If this happens I do not expect growth of bad credits. As a whole, banks always tend to help their clients who face difficulties. My message to the debtors is to turn to the bank when they face difficulties paying out their credits. They must know that the bank is their partner and in all cases it will find the right solution for overcoming the difficulties.

The interest rates of the deposits also decrease. At the same time several banks predicted in their analysis that the increased interest to bank deposits will continue. What are your expectations?

I definitely consider that the public interest to bank deposits will continue although the interest rates decrease. In the case of legal entities the deposited sums in bank will remain there until the market conditions and business environment change so that new investment projects and growth of the existing business can commence.

But mainly households and citizens have savings. They have twice the savings of legal entities. I also expect the public interest to bank deposits to remain for households and citizens because they are more conservative and careful in spending.

You mentioned that the money of the companies is currently in banks. Isn’t it better to make an investment instead of waiting for better development? 

Yes, it is better to make an investment but there are a number of other elements, which effect this process. One of them is the risk of the business environment. There must be favourable business environment in the country and abroad so that we are witnesses of investments and development. Unfortunately, the business environment right now is not very good and the conservatism of the companies to make an investment is understandable.

What kind of products do clients need right now?

Clients have different needs. Those who have free cash would want to invest their money at a maximum profit. It is very important for them to receive quality service in the right place and time. The debtors want have the guarantee that if they have problems with paying the credit installments the bank will assist them. The clients find interesting the products which have high added value as well as innovative products. Online banking, for example is very convenient, precious and useful because it can be used at any time worldwide.

What will be the development of the banking sector this year in your opinion?

As I see it, there will be growth in crediting with an emphasis on bank deposits and innovative products with high added value of clients. In this way we will increase the number of banking services for our clients because we must be more interesting and attractive.