Listen to the news

In the third quarter of 2022 (July - September), the assets of the banking system grew by BGN 6.8 billion (4.8 percent) to BGN 148.9 billion at the end of September, with the largest amount the loan portfolio increased.

This is stated in the quarterly edition "Banks in Bulgaria", which is prepared by the "Banking Supervision" department of the BNB, published on the website of the central bank.

It contains an analytical overview of the state of the banking system during the past quarter, supervisory regulations and balance sheets and income reports by bank groups and for individual banks in the country.

In the July-September period

an increase was also observed in the most liquid balance sheet item "cash, cash balances with central banks and other demand deposits", as well as in debt securities.

The attracted deposits in the banking system recorded a higher quarterly increase compared to the previous two quarters of last year, according to the BNB analysis. 

The five significant banking institutions (according to the criteria of the European Central Bank) at the end of September 2022 formed 66.7 percent of the assets of the banking system, and the less significant - 29.8 percent (at 66.4 percent and 30.3 percent at the end of June), the analysis notes.

Compared to the end of June 2022, the total amount of gross loans and advances increased by BGN 3.2 billion (3.6 percent) to BGN 93 billion at the end of September, the analysis shows.

Receivables from credit institutions during the quarter rose by 2.2 percent (BGN 198 million) to BGN 9 billion at the end of the period.

The gross credit portfolio of the banking system grew by 3.7 percent (BGN 3 billion) and reached BGN 84 billion, which was mainly contributed by the increase in household loans - by 4.2 percent or BGN 1.3 billion. and for non-financial enterprises - by 2.7 percent or BGN 1.1 billion, the analysis says.

An increase was also observed in loans to other financial enterprises - by 8.7 percent, BGN 482 million, as well as to the "State Government" sector - by 7.7 percent, BGN 68 million.

The share of receivables from residents was 88 percent at the end of September 2022, and from non-residents – 12 percent.

In the currency structure of loans and advances, the share of receivables in BGN increased to 63.2 percent at the end of September, at the expense of the decrease in euros - to 33.1 percent (from 62.4 percent and 33.5 percent at the end of June) .

There was a decrease in the share of loans and advances in other currencies during the period - from 4.1 percent to 3.8 percent at the end of September.

It is also indicated that credit activity remains high both among households and in the segment of non-financial enterprises.

The demand for loans from households is influenced by the strongly negative values ​​of real interest rates, while for non-financial enterprises, working capital needs and the need to accumulate stocks in conditions of high uncertainty and an increase in production costs play a decisive role, the analysis notes.

On the side of credit supply, the growth of the deposit mass and the stable liquidity position of the banking system contribute to the high credit activity.

And in the third quarter of 2022, the share of non-performing loans continues to decrease, and this dynamic is determined entirely by the growth of the loan portfolio, the BNB analysis notes. 

They predict a double growth of interest on loans this year

In the short term, the increase in credit volumes has a positive effect on the profitability of the banking sector, but prolonged periods of high credit growth create prerequisites for the accumulation of credit risk in banks' balance sheets and increase the probability of its future materialization in the event of a deterioration in economic conditions or a sharp increase in interest rates on loans, warns the BNB.

A significant increase in the prices of energy carriers, potential difficulties in supply chains and a slowdown in external demand are factors that can negatively affect economic activity and the financial condition of enterprises and households.

The global process of a rapid rise in interest rates in the coming months will be transferred to their levels in the country,

During the July-September period, deposits in the banking system increased by BGN 6.4 billion (5.2 percent) to BGN 128.2 billion, the analysis also states.

Deposits of non-financial enterprises increased most significantly - by 10.5 percent or BGN 4.0 billion. Growth was also recorded in the deposits of households - by 2.5 percent or BGN 1.7 billion, of credit institutions (with 7.0 percent, BGN 482 million), to the "State Government" sector (by 3.6 percent, BGN 128 million), as well as to other financial enterprises (by 0.8 percent, BGN 32 million ).

At the end of September, the share of deposits of residents was 90.8 percent, and of non-residents - 9.2 percent.

The share in levs is 59.2 percent, and those denominated in euros - 33 percent.

The share of funds in other currencies increased from 7.5 percent to 7.7 percent, the analysis noted.


Bulgarian National Bank