A three-year deposit with tbi bank gives you a total return of 9% over the period with an expected cumulative inflation of 6-8% total over the same time, the CEO points out
- Lukas Tursa is an Executive Director with the Finance department at tbi bank. He has over 20 years of experience in financial markets and asset management.
- He managed financial and investment activities of state institutions and commercial banks in various European countries.
- He holds a Master’s degree in Business, Finance and Economics from Vilnius University (Lithuania) and in Banking and International Finance from Cass Business School (London).
While the largest banks in Bulgaria still maintain interest rates on savings products at levels close to zero, thus disincentivizing their customers to deposit, some banks are challenging the sector with interest rates that approach and even exceed expected inflation levels. tbi bank is one of those banks that is attracting more and more customers with its savings products.
Over the past few years, the bank has been a leader in terms of deposit portfolio growth and interest rates offered thanks to its successful business model. Lukas Tursa, executive director at tbi bank, analyzes the savings market in Bulgaria and shares advice for people who want to make their money work for them.
– Mr.Tursa, according to BNB data, the savings of Bulgarians are constantly increasing. What makes deposits so popular?
– The majority of Bulgarians have bank accounts and certain funds in them. We should clarify that under “savings”,the BNB data actually covers the money that people keep not only in time deposits,but also in current and savings accounts. Actually, only about a third of the saved funds are in time deposits, and the rest are in checking accounts that people don’t get a return on.Also, most of the money on deposits is at zero or close to zero interest.
– Why do Bulgarians keep money in banks at 0% yield?
– This seems to be a habit. most people save in the bank were they receive their salary or pension. This is not always the best way to look after your money because your bank may not provide good returns or service. It’s more logical
to look for the best deals in terms of returns, convenience and service. You can easily find them and take advantage of them immediately thanks to new technologies such as comparison platforms, mobile banking applications, digital account opening and others.
– What makes the deposit a suitable product for investment at the moment?
– There are many reasons to choose a term deposit for your savings. First, it is a safe product, since the money up to 196 thousand BGN are protected by the Bank Deposit Guarantee Fund. Even riskier financial investors diversify part of their portfolio in the form of deposits.
In addition, time deposits are among the most convenient financial products. They are easy to manage,with clear terms – you get exactly as much as promised,and you can easily calculate your yield at maturity.
You just have to choose the best offer on the market in terms of interest and term that best suits your savings goals.
- According to the general opinion, tho, inflation melts money on deposits. Is that so?
– This is no longer the case. A common mistake when analyzing deposit returns is to compare current inflation or even past years’ inflation with future deposit returns. If you invest now,you should
to compare the return on the deposit with the expected inflation for the relevant future period.Look, there are already offers on the bulgarian market for deposits with a higher annual interest compared to the expected inflation. For example, a three-year deposit in tbi bank brings you a total of 9% yield for the period with an expected cumulative inflation of around 6-8% total for the same time based on various forecasts. So money invested now in a long-term deposit will not only not be melted away by inflation, but may even bring additional real income to individuals and households.
– There is still a large amount of cash outside the banking system. What are the risks for people who keep their money in cash?
– This is very risky. Cash can be lost, its value decreases over time, there are robberies and scams that we hear about daily in the news… Older people are the most common victims. Therefore, we strive to educate them and encourage their children and grandchildren to help protect them from the dangers of the modern world. The bank deposit continues to be the safest place to store savings, and it also brings real income.
– Is there an alternative to term deposits? What other products allow people to put money away safely and earn interest without “locking up” their savings for a long time?
– Savings accounts are such an alternative. But as with deposits, with savings accounts, people also need to
are well informed about the specific terms, including yield, fees, commissions and more.
At tbi bank, we have created the flexible savings account “Piggy bank in our mobile request. It provides 1.0% annual interest paid on a monthly basis, while maintaining access to the money at any time of the day. I would advise customers to spread their savings across different products.
In deposits of different durations for long-term purposes, and for shorter-term or unforeseen ones to set aside part of their money in “Piggy bank”. The state fund protects money up to BGN 196 thousand in savings accounts.
– What are the expectations for interest rates on deposits in the coming years? Will they be increased,stabilized or reduced by the European Central Bank and BNB?
– I think we have seen the peak of interest rates on deposits in Bulgaria. Well, unfortunately, most Bulgarians did not feel it due to the specifics of the local banking system. It is likely that the European Central Bank and the BNB will continue to reduce interest rates on savings. Expectations for 2025 are to stabilize the
interest rates around 2-2.5%. All this makes the moment very suitable for opening a 2- or 3-year deposit at the highest interest rate on the market.
What are the key trends influencing the savings behaviors of Bulgarians in 2023?
Interview: Exploring the Bulgarian Savings Market with Lukas Tursa, Executive Director of tbi Bank
Editor (Time.news): Welcome, Mr. Tursa! It’s a pleasure to have you with us today. with your extensive experience in financial markets, I’m looking forward to diving into the current state of savings in Bulgaria.
Lukas Tursa: Thank you for having me! It’s a great chance to discuss a topic that’s incredibly relevant right now.
Editor: Let’s start with the basics. According to recent data from the bulgarian National Bank (BNB), savings among Bulgarians are on the rise. What factors do you believe contribute to this growing popularity of deposits?
Lukas: ItS true that savings are increasing. Moast Bulgarians have bank accounts, and while BNB data includes various types of accounts, it’s vital to note that only about a third of these deposits are in time deposits. The rest often sit in checking accounts with little to no interest. This pattern indicates a habitual reliance on banks where individuals recieve their salaries or pensions,which may not yield the best returns.
Editor: That’s interesting! So,why do you think people continue to keep their money in accounts that provide little to no yield?
Lukas: It largely stems from habit. Manny people are comfortable where they are, often viewing their bank as the go-to option simply because it’s where they manage their primary income. However, this situation doesn’t always work in their favor. They could benefit from shopping around for better rates and services.Today’s technology, like comparison platforms and mobile banking applications, makes it easier than ever for consumers to evaluate their options and maximize their returns.
Editor: Absolutely! And with inflation rates expected to hover around 6-8% over the next three years, why would you recommend a three-year deposit at tbi bank, which offers a total return of 9%?
Lukas: A three-year deposit is an attractive option for several reasons. First, it’s a secure investment. Funds up to 196,000 BGN are protected by the Bank Deposit Guarantee Fund, which gives depositors peace of mind. additionally,the returns we offer not only outpace expected inflation but provide a reliable way for individuals to earn interest on their savings while keeping their money safe. Even experienced investors recognize the value of deposits as part of a diversified portfolio.
Editor: Interesting viewpoint! In a market where other banks are not offering competitive rates, what do you think sets tbi bank apart?
Lukas: We have focused on a business model that prioritizes customer needs. While many larger banks offer little incentive for saving,we challenge that notion by providing higher interest rates and better overall service. Our growth in the deposit portfolio is a testament to that.We’re committed to making it easier for customers to find suitable savings products and ensuring that they understand the benefits of more lucrative options.
Editor: That’s encouraging to hear! Before we wrap up, what key advice would you impart to Bulgarians seeking to make their money work harder for them?
lukas: I would tell them to educate themselves and explore all available options. Don’t merely settle for the bank where your salary is deposited. Leverage technology to compare rates, assess services, and actively seek opportunities that offer better returns. Saving should not just be a habit but a strategic financial decision.
editor: Thank you for your insights, Mr. Tursa. It’s clear that with proper guidance and awareness, Bulgarians can considerably enhance their savings strategy.
Lukas: Thank you for the opportunity to share this information! It’s crucial for consumers to be proactive about their finances.
Editor: And thank you to our audience for joining us today. We hope this conversation has provided valuable insights into navigating savings in today’s market. Until next time!