Equity Analysis /
Bulgaria

Banking System Overview H1'2021

    First Financial Brokerage House
    15 September 2021

    H1’21 PROFITABILITY IMPROVES ON INCOME GROWTH AND LOWER COST; NPE’S DECLINE FURTHER

    • Bulgarian banking system registered 27.8% YoY net income growth in H1’21 to BGN 658.6m on growth of net interest income, net F&C income, positive FX effect, lower contribution to resolution funds and deposit guarantee schemes and lower credit provisioning. 12-m trailing ROE of the banking system slightly improved to 6.2% from 5.8% at Q1’21 end and 5.5% at end-2020. • Annual growth of gross loans came to 6.8% YoY (+BGN 4.5bn) as of end-June with corporate loans up by 4.6% YoY (+BGN 1.7bn), mortgage loans surging 12.4% YoY (+BGN 1.6bn) and consumer loans increasing 8.4% YoY (+BGN 1.1bn). • The interest rates remained on downward trend in H1’21. The BGN denominated new corporate loans had 31bps lower average interest rate (2.65%) compared to H1’20, the BGN mortgage loans had 15bps lower average interest rate (2.76%) and the BGN consumer loans registered 32bps lower average interest rate (7.80%). • The statistics for 90-days overdue ratio revealed a new record low level of 4.58% of gross loans at the end-June compared to 4.78% at end-2020 despite the expiration of the moratorium on bank payments at end-March. • The total non-performing exposures declined by BGN 503m YoY and by BGN 198m YtD to reach BGN 5.5bn at end-June while the NPE’s ratio was down to 7.7% of gross loans (excl. loans to credit institutions) vs 8.22% at end-2020. The payments on 14.3% of the gross loan portfolio were still deferred under the moratorium terms.