Business crediting stirs up, bad corporate loans decrease further

Bad corporate loans decreased for a second consecutive month. Their share in the total credit portfolio of banks decreased from 20.53% in February to 20.29% or BGN 4.57 bn in March, Bulgarian National Bank (BNB) data showed. Moreover, statistics reported a stir-up of crediting in the corporate sector – loans extended to firms increased by BGN 33.4 mln (3%) in March and reached BGN 31.66 bn.

Lending to households, however, was still shrinking - albeit with a trifling 0.7% from March 2010 - to a total of BGN 18.92 bn. Housing credits at the end of March stood at BGN 8.716 bn, registering a 2.7% increase. Consumer loans declined by 2% year-on-year to BGN 7.53 bn.

Despite the good data for the corporate sector as a whole, the share of non-performing credits continued to increase. According to BNB data for March, these rose by BGN 39 mln (0.5%) to BGN 7.6 bn. However, this was the second month in which bad loans rose at such a slow pace. Despite the decrease in non-performing loans, these account for over 19% of the total loan portfolio of the banking system. The share of bad and restructured consumer loans reached a record-high 17.74% at the end of March, overdue housing loans also reached a record level of 17%. Households’ bad loans registered the 23rd consecutive increase to 17.63%.

The tendency of saving money for a rainy day also persisted. Despite the fact that the average interest rates on deposits fell below the annual inflation rate, both businesses and households continued to save money in Bulgarian banks. According to BNB, corporate deposits stood at BGN 12.50 bn at the end March, having increased by 5.1% from the same month of 2010, while in February 2011 their year-on-year increase was 3.4%. Households’ deposits at the end of March totaled BGN 27.917 bn, up 11.5% from March 2010.

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