Bulgarians Rush to Deposit Savings Ahead of Euro Adoption

Bulgarians are increasingly choosing to place their savings in banks, with financial institutions forecasting a noticeable rise in household deposits, particularly in the national currency. According to a survey among representatives of commercial banks and other financial intermediaries, this trend is expected to intensify as citizens use the remaining time before Bulgaria’s adoption of the euro to move their cash into the formal banking system. On January 1, 2026, these deposits will be automatically converted to euros, free of charge, which appears to be encouraging people to secure their funds in lev-denominated accounts.

The survey also shows that expectations for long-term household deposits have doubled compared to the previous edition. This shift suggests growing confidence among citizens and a desire to reduce uncertainty by committing funds for longer periods. Meanwhile, non-financial enterprises are anticipated to see a slower increase in their account balances, reflecting a more cautious approach on the part of businesses.

For the third quarter of 2025, banks continue to forecast moderate credit growth, consistent with previous expectations. Household lending remains the main driver behind overall credit activity. Balance sheet projections have not changed since the last survey, both in terms of total lending growth and household-specific loans. Following a brief slowdown earlier in the year, the pace of lending to the private sector stabilized, maintaining an annual growth rate of 14.3% for the May–July period.

There is, however, a shift in banks’ expectations for lending to non-financial corporations. Institutions now foresee greater growth in long-term corporate loans, typically linked to investment projects, while short-term financing such as overdrafts is expected to expand more slowly. This development mirrors trends observed in the first half of the year, when corporate overdraft growth declined in parallel with a significant reduction in company inventories during the second quarter.

As for inflation expectations, the views of financial intermediaries remain largely unchanged from the previous survey. A majority still foresee a slight rise in consumer prices during the third quarter, while others expect no major movement. Among commercial banks specifically, opinions are evenly divided between those predicting a modest increase and those anticipating stability.

Looking back, the price forecasts from the previous quarter did not materialize as expected. Analysts had anticipated a slight acceleration in inflation, yet the data show a slowdown instead. The Harmonized Index of Consumer Prices (HICP) decreased from an average annual rate of 3.9% in the first quarter of 2025 to 2.9% in the second quarter, indicating that inflationary pressures eased more than initially projected.