Nikola Bakalov, CEO and Chairman of the Management Board of Fibank: Bulgaria’s accession to the eurozone will strengthen the country’s macroeconomic stability
Interest rates on loans already granted will remain the same as they were on the last day before adoption of the euro.
Interview with RUMYANA DENCHEVA, 24 Chasa newspaper, 28.05.2025, issue 125
Highlights:
In 2024 alone, Fibank has supported Bulgarian businesses and households with over BGN 860 million in loans;
The bank manages risks conservatively, avoiding loan concentration in related sectors such as construction and housing;
It finances Bulgarian enterprises under approved European programs, special are terms available waiving loan application fees until the end of June.
Everyone is looking forward to January 2026. Then we will see off the Bulgarian lev and introduce the euro, despite some attempts to postpone that date. Is First Investment Bank ready for the challenge, Mr. Bakalov?
On October 1, 2020, Bulgaria officially became part of the European Banking Union as a prerequisite for its subsequent accession to the eurozone. From that moment on, all banks in the country began their preparation for joining the eurozone. At this point in time Fibank, same as any other bank in the country, is well prepared.
How about your customers that use current accounts, deposits, loans, payment cards, or other bank products. Do they have to do anything in preparation for the change?
I often comment on that, but I want to use this opportunity and repeat it once again, through your media. For any funds that customers hold in their bank accounts, currency conversion will be carried out automatically and immediately on January 1, 2026, at the fixed BGN/EUR exchange rate, absolutely free of charge. Currently, the Bulgarian currency in circulation amounts to BGN 30 billion and this is a way for people to avoid uncomfortable situations. I also want to address another question that raises significant concern among society, namely, what will happen to interest rates on existing loans. The answer is that interest rates will not change and will remain the same as they were on the last day before official adoption of the euro.
The accent in our preparation for the country's accession to the eurozone is that the process should cause minimum disturbance to customers. In other words, anything that can be done automatically and without their active effort and participation, will be done that way. During the first 6 months after the introduction of the euro, BGN banknotes and coins may be exchanged to EUR free of charge at banks.
Let's hear about the benefits of adopting the euro from a top banker at a commercial bank. Most voices heard in the media belong to analysts, ministers, and MPs, but I'm sure people would like the opinion of someone responsible for keeping their money.
Accession to the eurozone will strengthen Bulgaria’s macroeconomic stability. The country has already reached the maximum credit rating for an economy of its size outside the eurozone. That is why we expect that rating to be raised with our accession to the eurozone. Better integration into European economic and financial structures should also have a positive impact in terms of boosting investor interest in Bulgaria. The eurozone accession will facilitate trade and reduce transaction costs for Bulgarian companies, especially in export-oriented sectors. In the long term, this will stimulate economic growth, income increase and convergence with more developed EU economies.
As far as banks are concerned, we will be able to expand our product portfolio and offer a wider range of financial services, including cross-border banking services.
Of course, we shouldn’t forget something very important. The eurozone will give us opportunities to achieve everything said above that we haven’t had before, but these achievements will not happen by themselves. How we make the progress, at a faster or slower pace, depends on us as businesses and a society. But I feel optimistic that we will be able to quickly achieve the desired results.
We know that the devil is usually in the details. Where could there be glitches in the introduction of the new currency and where should the government direct its resources to avoid them?
According to BNB statistics, at the end of March 2025, money in circulation reached BGN 30.0985 billion, including 583.7 million banknotes and 3.4 billion coins. The total amount of banknotes and coins that will be needed for the BGN to EUR exchange weighs 12,300 tons and could fill 620 semi-trailer trucks.
I think figures themselves speak clearly enough about the scale of the process of conversion of Bulgarian lev into euro. In order for that process to flow smoothly and in the easiest possible way, consumers are best advised to deposit their free funds in the bank before introduction of the euro. Thus, on the respective date, the bank will automatically and completely free of charge convert their levs into euros using the fixed BNB exchange rate.
Banks in the country have a well-developed branch network, covering almost every larger settlement, and all those branches will be available to people wishing to exchange their available BGN funds into euros. Fibank alone has 114 branches and offices throughout the country, including 34 outlets in Sofia and 80 in other cities.
Many people, for one reason or another, prefer to wait until the last moment, but in this case they should better act earlier as this would make the process easier for them.
We all saw off a troublesome and uncertain 2024. What was that year like for First Investment Bank?
For Fibank, it was one of the most successful years so far. We reported a record profit of BGN 333.5 million before taxes and depreciation, which is an increase of 16% compared to 2023. The bank's total assets reached BGN 15.7 billion, a growth of 13.5% on an annual basis which exceeds the average growth rate of 11.4% for the banking system. Our loan portfolio grew by 10.6%, reaching to BGN 7.9 billion. In 2024 alone, we supported Bulgarian businesses and households with over BGN 860 million in loans.
In 2024, Fibank and its subsidiary МуFіn became the first financial institutions in Bulgaria to offer instant payments in euros for their customers. In addition, the bank introduced modern digital zones in its offices, matching customers’ dynamic lifestyle. Fibank's Digital Event Zone project became the winner in the Best Customer Marketing Strategy category of the prestigious Engage Awards held in London, UK. Fibank also received a special distinction in the Customer Trust category of the Banker of the Year awards.
What are your main objectives for the current year? Are you able, based on the first quarter results, to forecast how you will go forward?
The data for the first quarter of the year indicate a clear growth trend, a stable capital position and high operational efficiency. The bank not only maintains its strategic positions, but also shows readiness to take advantage of the new market opportunities in a dynamic economic environment.
Sustainable growth is observed across all key metrics, from earnings and assets to loans and deposits. Fibank reported a 165% increase in net profit to BGN 49.6 million at the end of March, which is a significant result given the changing market conditions. Total operating income reached BGN 159 million, a 36% increase compared to the same period in 2024 when it amounted to BGN 117 million.
The bank's assets continued to grow, up to BGN 15.8 billion as of 31March, 2025. This is a rise of BGN 160 million compared to the end of 2024, allowing Fibank to maintain its position among the top 5 banks by asset size in the country. Stable growth was also reported in our loan portfolio which reached BGN 8.2 billion, an increase of BGN 308 million since the beginning of the year.
Fibank reported significant growth in consumer and residential lending in the first quarter of 2025, continuing to strengthen its market positions in these segments. The portfolio increased by BGN 127 million in consumer loans and by BGN 53 million in residential loans, with Fibank's market share in retail lending increasing by 0.4 pp to 7.8%. The bank manages to maintain and expand its share in the credit market thanks to competitive terms, flexible products and outstanding customer service.
Fibank is a public company and your shares are listed on our stock exchange. A few days ago, a stock exchange announcement made it clear that they are the most traded gainers. What stands behind this success?
Investor interest in our stock is natural, given the bank's good financial results. The price of Fibank's shares increased by 48% in 2024, and by 47%. in 2023. At the beginning of this year, we received the award for Most Liquid Issuer in the Premium and EUROBRIDGE share segment on the main market of the Bulgarian Stock Exchange for 2024. I attribute this interest and the positive price dynamics to our accumulated experience, flexible management process, and rapid adaptability to the changing and highly competitive environment. Where these key elements are present, the investor attention will follow even in an illiquid stock market like ours. Last week, our share price reached BGN 5.40.
You offer different products and services to your customers. How do you create your portfolios and how do you decide on launching a given product or service?
When deciding on new products and services, we have always been guided by the needs of our customers. They are the ones who give us indications of their needs. We offer the best of international banking services, adapting it to the Bulgarian market according to the habits, preferences and desires of our customers. We implement bold and innovative financial solutions that make managing personal finances easier, accessible and successful.
Give us some examples of new and successful products
Without doubt, the interest of our customers was most strongly attracted by the new opportunity for making investments through the My Fibank mobile application. At the beginning of 2025, we opened a new door to the world of investments by launching the Investments module in our mobile banking. It allows customers to trade stocks and ETFs not only on the Bulgarian market, but also internationally. The service is easily accessible and suitable for both experienced investors and complete beginners. The interface is simple and intuitive, which also contributes to its high popularity. In just the first two months after launching the service, over 1200 customers began to actively use it.
Attractive terms on our credit products also stimulate borrower demand. Fibank reported significant growth in consumer and housing lending in the first quarter of 2025. The portfolio increased by BGN 127 million in consumer loans and by BGN 53 million in residential loans, with Fibank's market share in retail lending increasing to 7.8%.
The interest in current accounts, debit and credit cards, and savings products offered by Fibank, remains high. The most popular deposit with our retail customers is called Tradition and combines flexible terms with good profitability. We have also considered professional investors, offering them the more sophisticated Perspective product.
Over the years, Fibank has also established itself as a preferred bank for small and medium-sized enterprises. Both when serving individuals and companies, our guiding principle has always been to approach each customer with attention to their individual needs and potential. Together, we try to find the optimal solutions, contributing to their success and prosperity. Currently we emphasize on programs in support of agricultural producers, financing of Bulgarian enterprises under approved European programs, and our Smart Lady initiative, among others.
Since 31 March 2025, we have added the Parking Zone service in My Fibank mobile application. It allows everyone to quickly and easily pay for their car's stay in paid parking zones in major cities across Bulgaria without being charged any additional fees.
Fibank was among the first banks in Eastern Europe to offer Visa's Click to Pay service, making online payments even faster, easier and more secure..
The terms we offer to merchants using our POS terminals are extremely competitive. This accounts for the growing interest of retailers in both physical and virtual POS devices offered and serviced by Fibank.
How about your plans for the near future? What should your current and potential customers expect?
Being a technology leader in the sector is, above all, a responsibility. People expect from us the latest, most accessible and most profitable banking products. Thanks to the technological innovations that we constantly introduce and the hard work of our experts, customers will continue to enjoy modern, convenient and secure banking, both digitally and in person, at Fibank’s offices.
The scale at which we operate and develop is making the Bulgarian market increasingly narrow, and very soon we will have news in this direction.
Your construction loans have been in high demand. Why have you recently cut back on granting them and what will you offer instead?
In recent years, there has been a boost in all its aspects of the real estate market, not only in terms of housing loans, but also in terms of construction and its associated costs. Following the most up-to-date practices for good corporate governance, Fibank has adopted a conservative risk management policy. That is why we try to avoid loan concentration in interdependent segments, such as construction and housing, and place an emphasis on retail lending instead. This also allows us to increase the pace of building a loan portfolio of customers developing sustainable business, which will be of increasing importance for banks in the near future.
We are focused on innovation and increasing the competitiveness of Bulgarian manufacturing enterprises, with the aim of developing both the country’s domestic market and its exports. The economic benefits of the Schengen area contribute to the growth of trade volumes and open up opportunities for the transport sector. We also believe in Bulgarian tourism and support its efforts to establish Bulgaria as a leading destination. We finance Bulgarian enterprises under approved European programs and have special terms available, such as waiving loan application fees until the end of June.
Коментари