The amount of household savings, which has historically been low in Latvia, has increased significantly during the pandemic, reaching 12 billion Euro. However, unlike Lithuanians and Estonians, who are increasingly likely to invest their disposable money in shares and funds, Latvians are more likely to save in their bank accounts or deposits, where earning opportunities are close to zero, according to information collected by Citadele subsidiary CBL Asset Management.
Household interest in saving money elsewhere than a deposit account increased slightly last year, but not as much as total savings increased. Last year, deposits by Latvian private customers at Citadele increased by around 15%, while the increased balance in Latvian private customer securities accounts is largely due to the increase in value of the financial instrument market, with very few new investments. Investing in longer-term products last year was very unpopular: investments in level 3 pension plans increased by only a few percentage points over the course of the year, while total investments in accumulative life insurance even decreased. This is probably due to the fact that, during crises and times of uncertainty, people choose to have fast and easy access to their savings if necessary.
“Statistics show that people in the Baltics save in their current accounts and deposit accounts, and the household habit of saving elsewhere—cumulative life insurance, level 3 pension, stocks and investment funds—is underdeveloped. At the same time, postponed trips, entertainment and cultural events probably led to savings which were not intended to be long term, and this has prompted interest in different ways of investing spare cash. However, according to statistics, in most cases this interest has unfortunately not resulted in real investments,”
– explains Kārlis Purgailis, Chairman of the Board at Citadele subsidiary CBL Asset Management.
In Latvia, around half of households investments are in life insurance, and other investment opportunities are used significantly less. Meanwhile, the opposite is true for Lithuania and Estonia: investments in shares, funds and debt securities dominate.
Compared with their Baltic neighbours, Latvians are less keen to earn by investing their disposable money in funds and shares, while Lithuanians are the most active. When looking at household savings, Latvia has low levels of activity in investing in funds—around 260 million Euro—while levels in Lithuania are around three times as high—around 720 million—and around 260 million in Estonia, according to Eurostat figures for the end of the third quarter last year. Meanwhile, investments in shares in Lithuania and Estonia outpaced Latvia several times over, at around 700 million in Lithuania, 620 million in Estonia and around 210 million in Latvia.
Household investments in the Baltics make up just a small proportion of total financial activity, and households in all three Baltic countries invest less than in other European Union (EU) countries, even taking into account the current economic development of the Baltics. Excluding funded pensions, household investments from total financial assets are around 13% in Latvia and Lithuania, around 16% in Estonia, while in Sweden, for example, this figure is over 60%, in Germany it is around 45%, and in Poland it is around 19%, according to Eurostat figures.
Citadele Bank’s subsidiary, IPAS CBL Asset Management, is one of the leading and most experienced financial asset management companies in the Baltics, employing globally-recognised fund managers. It has managed investment portfolios since 2002. Meanwhile, in 2003, it became one of the first in Latvia to manage level 2 pension savings.
CBL Asset Management has the largest team of managers in Latvia, which regularly analyses the financial and capital market and macroeconomic trends using their experience and the latest technologies, investing pension savings in both large international and local Latvian businesses, as well as in the bonds of various countries.
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AS “Citadele banka”