After a record high in 2018, bank profits in Bulgaria continue ascent


For the first four months of this year banks in Bulgaria are reporting a net profit of 232 million euro/454 million Leva/ or 14.5 percent more than in April 2018.

Sega newspaper comments that this double-digit increase is particularly impressive in view of the unprecedentedly low interest rates that have been in place for over a year. For the whole of 2018, profits in the banking system amount to 850 million euro /1.67 billion Leva/ which is 40 percent up on 2017, marking a 10-year record.

Loans and deposits continued to go up, reaching, at the end of April, 31.9 billion euro /62.3 billion Leva/ and 46.8 billion euro /91.6 billion Leva/ respectively. The increased lending and the practically zero deposit costs are the reason why banks earned 467 million euro /912.6 million Leva/ from interest in the first four months of this year, which is 5.5 percent more than a year ago. Yet net revenue from fees and commissions has gone up twice as fast, amounting, in the January-April period, to 185 million euro /360.8 million Leva/, or 10 percent more than in 2018.

But the lower cost of recouping bad loans is another factor that has contributed to the good financial results of the banking system in Bulgaria. Still, over the first four months the impairment costs of non-performing loans amounted to

67 million euro /131 million Leva/, whereas on 30 April this year they amounted to 56 million euro/110 million Leva/. According to Bulgarian National Bank data non-performing loans amounted to 3.4 billion euro /6.71 billion Leva/, or 7.4 percent of the total loan portfolio of the banking system.

As to Bulgaria’s bid to enter the Eurozone waiting room, the European Central Bank is to conclude the overview of the assets of six banks by the end of this month. The banks under review are the three biggest banks – UniCredit Bulbank, DSK Bank and United Bulgarian Bank, plus three banks with majority Bulgarian shareholding – First Investment Bank, Central Cooperative Bank and Investbank, Sega writes.

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