Petia Dimitrova, Chief Executive Officer and Chairperson of the Management Board of Postbank: Digitalization is the path we follow
25 April 2019
What is your overview of the Bulgarian banking sector for 2018 and what are your expectations for 2019?
2018 undoubtedly was a very strong year for the Bulgarian banking sector, as evidenced by the results – banks’ profit went up by two-digit figures, all business segments reported positive growth rates, the quality of credit portfolios continued improving. This is good news for banks and the entire economy because it resulted from the higher economic activity of consumers and companies.
The results are a signal of optimism and a desire to implement promising projects. 2018 has been the most successful year in Postbank’s history – we maintained the bank’s stable organic growth rate, posted record-high financial results and growth rate, which exceeded the market average. I would like to specifically thank our clients and shareholders for their confidence, as well as our staff for their high professionalism and motivation because these are the key prerequisites for success.
The positive macroeconomic framework gives us reason to expect 2019 to be a good year for the banking sector. Some of the main factors for this are an estimated economic growth rate of over 3%, the record-low unemployment rate, a real income hike and, last but not least, the continuous attractive conditions of consumer and business loans.
In addition to 2016, some banks in Bulgaria are again subjected to stress tests , carried out by the European Central Bank (ECB) this time. Do you expect to see a different picture and will the stress tests affect banks’ activities?
The Bulgarian banking sector has always been one of the sectors subjected to the strictest regulations – we all comply with the common European regulations and operate in line with the requirements of the single market of financial services. The stress tests are a standard procedure for most lenders in Bulgaria, including Postbank, because they are part of international groups, currently supervised by the ECB. The asset quality review is a standard regulatory practice and it is normal to conduct it every few years. In addition, institutions hold such stress tests at least once a year as part of their internal capital adequacy analysis.
The period of record-low interest rates was expected to end but now the ECB and the Federal Reserve are changing their policies. What are your projections in this regard and what do you advise your clients to do?
The Bulgarian lev is pegged to the euro and the Bulgarian and European economies are closely integrated. This is why the country is more or less dependant on the ECB’s decisions. The ECB was, indeed, expected to start increasing the rates after this is what the US Federal Reserve (Fed) did several times in the past year. Now it is obvious that rates will not go up by end-2019 and the ECB will maintain a policy of incentives in view of the poorer prospects for the Eurozone economic growth. The Fed has recently announced it was not planning a rate increase by end-2019, which is a serious change compared to its so-far policy. Such cautiousness is understandable because currently there are many factors, which might affect the European and global economies such as Brexit, the upcoming European Parliament election and the US-China trade tensions.
On the other hand, the combination of maintaining the same monetary policy and the high liquidity of the Bulgarian banking system means that the record-low interest rates in the country will stay for now. However, we advise our clients to be cautious. Our clients’ trust is our most valuable asset.
We strive to be a consultant, a financial expert and a partner to our clients. This is why, indeed, we always discuss with them their long-term prospects and borrowing power because the interest cycle will turn sooner or later and today’s low interest rates should not be a main reason to take out a loan.
Do you expect new merger and acquisition deals in the banking sector this year or the process is coming to an end?
I expect the open deals in the sector to be finalized during the year but I do not think there will be new ones in the immediate future. However, the trend of consolidation in the sector in Bulgaria and globally is absolutely natural and will stay. It is hard for small banks to find their niche in the modern world – big lenders are more competitive, more secure, more efficient and have more resources to invest in digital and innovative products and services, which constantly improve the customer experience and service. We strive to provide more to customers by offering them more favourable conditions, which is the basis of the consolidation process in the banking sector.
What are your projections about the Bulgarian economy and which will be the drivers of growth?
I expect 2019 to be yet another successful year for the Bulgarian economy in terms of all indicators. The main growth drivers will be consumption and investments, as some big infrastructural projects are expected to be launched this year. The financial sector will also contribute to the economic growth because it will continue financing viable business projects, thus supporting all other economic sectors.
What will be the focus of Postbank’s activities this year?
Our goal for 2019 will be to continue growing and offering more innovative products and services in order to meet the highest customer expectations. Our long-term strategy remains focused on clients’ satisfaction, while digitalization is our way to fully provide it.
One of the key projects in this direction is the overhaul of the concept of our branches’ we already launched. They will gradually become digital thanks to interior features designed to provide convenience to modern customers and self-serving zones, which offer personal approach and unique customer journey.
As part of our digitalization mission, we will continue developing the rest of our digital channels because we registered an impressive increase in their use. We are building upon EVA, Bulgaria’s first banking chatbot, Postbank’s mobile and internet banking functionalities, and are working on other innovative projects we will launch this year.
The investment in projects with added value for the community is another of our key priorities as a socially responsible company. We created a programme for a comprehensive support of scale-up companies in partnership with Endeavor Bulgaria, one of the most reputed global networks of entrepreneurs. We will select the best companies and will offer them our know-how, expertise, financing and support. We back promising scale-up businesses and invest in the development of the Bulgarian business environment. We believe this is the right path to grow together and make the economy more competitive on a global scale.
We continued also our strategic educational project in partnership with SoftUni, with which we promote the development of the future digital experts in Bulgaria and lend them a hand to realize their bold ideas together with us.
We set high goals and I believe we will achieve them because we have a vision, a strong team, rich experience and, most importantly, numerous clients for whom we are a trusted and preferred partner in the realization of their plans.
Petia Dimitrova has been heading Postbank since 2012 when she was appointed Chief Executive Officer and Chairperson of the Management Board. Her career in the financial institution started in 2003 as a chief financial officer of the eight subsidiaries of Eurobank EFG in Bulgaria. Prior to that, she worked at PricewaterhouseCoopers and the US Embassy in Bulgaria.
Petia Dimitrova is currently a member of the Management Boards of the Association of Banks in Bulgaria, Borica, Atanas Bourov Foundation, Endeavor Bulgaria Association and the International Banking Institute. She is also a member of the University Council of the American University in Bulgaria, of the Young Global Leaders Forum with the World Economic Forum, of the Young Presidents’ Organization, etc. Ms. Dimitrova is a chartered accountant, qualified ACCA member of the Association of Chartered Certified Accountants in London, UK, and has an Executive MBA degree in General Management from the University of Sheffield, UK.
