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News

Piggy banks grow fatter in Central and Eastern Europe in Covid times

16.12.2020
Company: Česká spořitelna, a.s.

  • Average monthly savings and investment volume rose in all CEE markets in 2020, continuing uptrend over past five years
  • Across region, increasing importance attached to putting money aside, but level of satisfaction with savings and investments varies widely
  • Key drivers for putting money aside: “rainy days”, planned purchases and safeguarding for old age
  • Widespread popularity of traditional products like savings books and building savings also reflects risk aversion among CEE savers

Across Central and Eastern Europe, people are generally putting more money aside in the form of monthly savings or investments in 2020 than they did a year earlier. While CEE savers continue to be particularly risk-averse and favor traditional savings products, the newest “Money Matters” survey IMAS conducted for Erste Group in the Czech Republic, Slovakia, Hungary, Romania, Croatia and Serbia, finds that the share of respondents unsatisfied with the amount they are saving or investing has declined in 2020. Those CEE savers managing to put more aside this year were able to do so thanks to higher incomes and improved overall employment levels, as well as by deferring or cancelling larger purchases. At the same time, 2020 has also seen a rise in the share of survey respondents saying that their personal financial situation has generally worsened over the past few years, with rising costs of living and the impact of the Covid crisis named as the main reasons by those putting less money aside.

“The Covid pandemic sees people in Central and Eastern Europe on average putting more aside monthly in the form of savings or investments. While that’s good news, the region’s strongly risk-averse public generally continues to rely heavily on simple banking products like savings accounts, even though in the current ultra-low interest rate environment these products cannot support the strengthening of their financial prosperity,” said Erste Group CEO Bernd Spalt. “For Erste, it’s clear what we need to do: help our customers make the most of their resources so that they can be on a sound footing in their financial lives. That involves providing clients with advice and services that are tailored to their individual situations and life goals.”
 

Increased monthly savings amounts across the region

In local currency terms, savers across in the CEE countries surveyed by IMAS managed to put more aside on a monthly basis in 2020 than they had a year earlier. Czechs and Serbs posted the largest increases (both up 9% year-on-year), outpacing the growth in the average monthly savings volume in Romania (up 6%), as well as in Hungary (up 3%), Slovakia and Croatia (both up 2%).

In absolute Euro figures, Slovaks (up 2% to EUR 113) continued to inch out the Czechs (up 4% to EUR 109). Average monthly savings on a Euro basis declined in Hungary (by 3% to EUR 63) and remained flat in Croatia (at EUR 63) due to currency developments. While they still lagged behind Romanians (up 4% to EUR 59) and all other CEE countries by putting aside an average of EUR 44 monthly, Serbians managed to post the strongest year-on-year rise in savings volumes on a Euro basis, putting aside 10% more than they had in 2019.

The general trend of people in CEE increasing their monthly savings is even clearer when comparing the results of the newest Money Matters survey with those for 2015: in all countries, people put aside considerably more money on a regular basis in 2020 than they had five years earlier. The rises in the average monthly amount being saved or invested were especially strong in the Czech Republic (up 43% in Euro terms) and Hungary (up 34%). In contrast, savers in Croatia are only managing to put aside 5% more on a monthly basis in Euro terms than they had in 2015.
 

Increasing importance attached to putting money aside

These higher levels of average monthly savings and investments reflect the fact that a very large and still growing majority of people in the CEE region attach great importance to putting money aside. In 2020, the share of respondents who said that saving or investing money regularly was either “very important” or “rather important” for them personally ranged from 69% in Serbia to 86% in Slovakia. Perhaps reflecting the impact of Covid-related concerns in 2020, that share rose sharply year-on-year in Hungary and Slovakia (both up 10pp), as well as in the Czech Republic (up 8pp) and Romania (up 6pp). This development was also mirrored in a broad decline in the share of respondents saying that saving or investing money is of “minor importance” or “not important at all” to them: only between 3% (in Slovakia) and 14% (in Serbia) of the survey’s participants took this stance.

Across the region, people also generally attach more importance to regularly saving or investing than they did five years ago. That is especially true for the survey respondents from Central Europe, where the share of Slovaks and Czechs who said that putting money aside as “very important” or “rather important” for them was 14pp and 19pp higher respectively than it had been in 2015. In contrast, in both Hungary and Serbia the share of those who viewed putting money aside as important was actually lower (by ca. 6pp) in 2020 than it had been five years earlier.
 

Smaller share of dissatisfied savers and investors

The 2020 survey respondents’ degree of satisfaction with the amount of money that they were able to put aside in the form of savings or investments varied widely across the surveyed CEE markets. On the one end, over 40% of Czech and Slovak respondents said that they were very or rather satisfied. At the other end of the scale, only a little more than 1 in 4 respondents in Serbia and Hungary were satisfied with the amount of money they managed to put aside. That diverging development was also apparent in the share of those who were less or “not at all” satisfied: this segment accounted for more than 1 in 3 respondents in all surveyed countries apart the Czech Republic and Slovakia. This dissatisfaction was most evident in Hungary, where almost half of the 2020 survey participants said they were not satisfied with the amount of money they managed to save or invest.

However, compared to 2019, the share of dissatisfied savers declined in most countries, most notably in Serbia (by 8pp) and Croatia (by 6pp). This development occurred despite the fact that the share of those who said they were less able to save/invest rose in most all markets in 2020, reaching 38% in Romania. Across CEE, those who were saving/investing less in 2020 put this development down primarily to the cost of living outpacing income, but lower income on account of the Covid crisis was named as either the second or third driver in all six surveyed markets.

At the same time, the largest share of respondents (most often clear majorities) said that their ability to save or invest regularly had not changed compared to 2019. Moreover, the longer-term trend towards a smaller share of dissatisfied savers/investors is clear when comparing the results of the 2020 Money Matters survey with those from 2015: the segment of dissatisfied savers has shrunk across all countries over the past five years, with their share declining by around 20pp in both Serbia and Croatia over the period.

How satisfied survey respondents were with their ability to save and invest was not directly linked to their view of how their personal financial situation had developed over the past two or three years. In all markets, relative majorities of between 39% (Hungary) and 50% (Croatia) of 2020 respondents said their personal financial situation has generally remained the same. However, the share of those who said it is now worse grew across CEE (with the exception of Serbia) to account for around 33% of respondents in Hungary and Croatia and over 20% in Serbia, Slovakia and Romania. In contrast, significant shares of Czech (38%), Slovak (29%) and Romanian (29%) respondents said that their financial situation has improved over the past two or three years.
 

Planning for the future, largely with savings products from the past

Across all six CEE markets in the Money Matters survey, being prepared for a “rainy day” is the leading motivation people mention for putting aside some money on a monthly basis. Having money available for smaller and larger acquisitions as well as renovations remained the second most commonly mention reason and gained in importance both on a year-on-year and five years’ perspective. Another prominent motivation for putting money aside, especially for respondents in Central Europe, involves safeguarding for old age: in order to bolster pension provisions, retire earlier, or ensure adequate nursing care.

In pursuing those goals, savers in most CEE markets continue to rely primarily on traditional savings products (savings books, cards and accounts). Other traditional banking products such as building savings and life insurance also remain popular across the region, with no great shifts having occurred in the composition of the Top 3 savings/investment products over the past five years. These choices also reflect the fact that CEE savers are exceptionally risk-averse, with large majorities in all countries (up to 84% in Croatia) describing themselves as “very” or “rather” safety conscious. That mindset also leads most CEE savers to take a decidedly neutral stance when it comes to investing their money into stocks, securities, bonds, funds and other such investments. According to the newest Money Matters survey, Romania is the only country in which the share of respondents with a positive view of such equity and debt investments is larger than that neutral stance.

 

Tags: Finance | Business Development |

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