Petia Dimitrova at Banks and Business: We Are Ready for New Bank Acquisitions


2 December 2021


“I expect the processes of consolidation in the Bulgarian banking sector to develop. We closely follow the dynamics and all opportunities on the market, and we are ready to participate in further such deals, as the international Eurobank group we are part of has the green light for more investment in Bulgaria,” pointed out Petia Dimitrova, CEO and Chairperson of the Management Board of Postbank, during the annual Banks and Business conference, organized by Capital, while discussing the topic of the latest deal on the Bulgarian market from a couple of weeks ago.


Petia Dimitrova stated that in the last months, the group has undertaken a series of acquisitions of other banks in the region. “The Serbian division of the group acquired Direktna Banka and just recently the investment in the second largest bank in Cyprus – Hellenic Bank – was also finalized,” said Petia Dimitrova and outlined the experience her team has. She affirmed that Postbank has a long-term vision and solid expertise, giving the financial institution reason to follow the natural aspiration to broaden its market share not only through organic growth, but also by acquiring more strategic players on the market.


“Since we are an extremely regulated business, many banks will experience difficulties covering the requirements with the strengthening of regulations and this is yet another factor influencing future mergers,” she underscored.


Another topic discussed by the guests at the conference was how high and lengthy will the inflation be and what are banks’ expectations. “The inflation we have been observing over the past months is indeed higher than we have grown used to in recent years yet is still far lower than the rates from the turn of the century when we had double-digit inflation. According to the European Central Bank, the current inflation is a temporary phenomenon and more and more central banks are willing to allow for a certain period of higher inflation,” stated Petia Dimitrova. She further noted that the ECB goal is 2% inflation in the medium term and their expectations are that next year inflation will be tamed.


Petia Dimitrova pointed out that the last decision from the end of October 2021 is that the ECB will continue the asset purchase program with a net amount of EUR 20 billion monthly for as long as necessary. “Mrs. Christine Lagarde made it clear that we should not expect increases in interest rates in the Eurozone before the end of 2023. This practically means maintaining low interest in the following year, as well as in the near future,” she added.


During the event, participants discussed mortgage lending and real estate prices in the country, agreeing on the opinion that at this stage we could not speak of a bubble in the real estate market in Bulgaria. Petia Dimitrova emphasized that, unlike in the 2008-2009 period, now banks are much more conservative regarding their loan criteria. “Compared to the population’s income, real estate is much more accessible now than 12-13 years ago and mortgage loans are serviced much more easily, including thanks to the record-low interest rates. Let me give you an example – at the end of 2008, as per data from the Bulgarian National Bank, there were approximately 130 thousand home loans in the banking system with an average value of slightly less than BGN 60 thousand. At the end of September this year, mortgage loans reach up to 180 thousand with an average value of BGN 75 thousand, which is less than 30% higher than in 2008. In the same period, the average wage increased by BGN 600 up to move than BGN 1500, i. e. by more than two and a half times,” Ms. Dimitrova summarized the real estate market in the country.


According to Petia Dimitrova, lending can be expected to continue its stable growth in the next year. “Even in the past crisis year and the current one, we never stopped lending and data proves it. In 2020, loans grew by 5%, while in this year it even accelerated – by September, an 8% growth on annual basis was recorded in lending,” she noted.


The forum’s guests discussed the latest innovations on the market with a special focus on the instant payments system. “Postbank is the first bank in Bulgaria, certified to offer its customers the modern digital instant payment in Bulgarian leva service under the Blink Program of BORICA,” Petia Dimitrova stated. She pointed out that it was a revolutionary step as the speed of the service offered is an incomparable convenience and will certainly improve customer experience.


The health crisis and its management were also among the topics discussed at the conference. Petia Dimitrova underscored that the most primary, most important factor is how the pandemic will develop in the coming year. “We are now much better prepared than two years ago, but if this situation continues long, it will have its consequences, since new waves and restriction on business and people will lead to insecurity and again postponing investment plans,” she shared.


The panel’s host also brought up the topic of developing ESG (Environmental, Social & Governance) strategies and the focus on sustainable financing. “In the next few years, there will be a significant increase in offering structured products for green energy and loans in support of the so-called Green Transition. The situation we are in and Europe’s priorities had a significant impact on our worldview,” Petia Dimitrova said and further declared that the transition is irreversible but everyone will be learning on the go as everyone is ready to a different extent.


During the discussion, the participants, among whom were CEOs and Chairpersons of the Boards of the largest banks in Bulgaria, shared the opinion that banks in Bulgaria are very stable in terms of liquidity and capital adequacy, since in the past two years they kept the realized profits.