BNB: Non-performing and restructured loans record a new record growth of BGN 340 mln in June

Non-performing and restructured loans were up by another BGN 340 mln in June, compared to May. Thus, their total amount exceeded BGN 8.25 bn as their monthly increase was the greatest since the beginning of the year, showed data of the Bulgarian National Bank (BNB).

In early 2011, bad loans increased by BGN 30-40 mln per month, which fuelled expectations that these were approaching their peak. But in April, the reported increase again exceeded BGN 100 mln – reaching BGN 140 mln, followed by BGN 178 mln in May and BGN 340 mln in June. The growth in bad loans was nearly BGN 2.4 bn on an annual basis, or 40%. Thus, according to the statistics of BNB, it turns out that non-performing and restructured loans are now 20.5 % of the total volume of loans or every fifth loan falls in this category (bank overdrafts are not included, which are considered to have no problems).

Total lending has reached BGN 40.281 bn but its growth rate is twice slower than that of bad loans. The proportion of bad loans (excluding restructured ones), which is announced at the end of each quarter, reached 12.93% by March 31, 2011. The data for the second quarter will be released by the end of this month.

The fact that the peak in bad loans has not been reached is confirmed by an estimate of the Fitch Credit Rating Agency for Central and Eastern Europe (CEE) . According to Fitch experts, non-performing loans in the banking system in Bulgaria, Romania and Croatia will reach their highest levels at the end of 2011. In Hungary and Slovenia this will happen in 2012. Fitch experts granted a D rating to the Bulgarian banking system. The banking systems in Hungary, Romania, Slovenia and Croatia received the same assessment. Banks in Poland, in the Czech Republic and Slovakia alone received a higher grade - a C rating, among CEE countries.

As in previous months, the largest share of bad loans were granted to businesses - they reached the amount of BGN 5.008 bn and, compared to May, their increase was BGN 219 mln, according to data of BNB. Their level is 21.7% of all funds allocated to businesses (overdrafts excluded) - including non-performing exposures, losses and restructured loans. An increase in bad loans was noticed in all other segments. In consumer crediting, bad loans reached BGN 1.44 bn, recording a monthly increase of nearly BGN 60 mln. These are some 18.3% of all loans granted, again without overdrafts. Mortgage loans followed the same negative trend - bad loans stood at BGN 1.567 bn, given that the increase was accelerating in this segment, reaching the amount of BGN 40.6 mln in a month.

Against this background, credit growth remains a one-digit figure in all segments. The statistics of BNB showed that loans granted to businesses in June alone stood at about BGN 32.1 mln, marking an increase of 4.1% per annum. Lending to households decreased by 0.6%, again due to the sharp decline of 11% in overdrafts. However, mortgage lending increased by 2.5% and BGN 8.766 mln were allocated for the purchase of new homes in June.

At the end of June, total deposits in commercial banks reached the amount of BGN 45.1 bn. Companies alone deposited 10% more money and the increase in household deposits was 11.2%.

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