Loans granted to companies are cheaper now, compared to pre-crisis levels

Loans granted to companies are cheaper now, compared to pre-crisis levels. According to data of the Bulgarian National Bank (BNB), the interest rates in June on all types of loans to companies up to and above €1 mln were lower, compared to those in the same month of 2008.

So, at the end of the quarter, loans of over a €1 mln were most advantageous to businesses. Companies which have withdrawn large amounts of more than BGN 1 mln have saved 1.58% in interest rates, compared to the same month in 2008, given that interest rates reached 8.16% in June.

Loans in Euro were 0.36% cheaper, with interest rates reaching up to 8.04%. The data showed that smaller business loans under €1 mln were also cheaper since is June the contracts in BGN were signed with interest rates of 9.54%, or 0.6% cheaper, while those in Euro were 0.14% cheaper, with interest rates of up to 8.59%.

Although interest rates are lower than those in the pre-crisis period, businesses apparently still do not dare borrow funds from banks. This trend is confirmed by the recent data of BNB which reported a minimal growth in corporate lending over another consecutive month.

Loans granted to businesses at the end of June stood at about BGN 928 mln, recording a minimal growth of 4.1% on an annual basis. Furthermore, the share of non-performing and restructured loans of companies is still the highest in the banking system. These stand at BGN 5.008 bn, out of a total of BGN 8.25 bn, recording an increase of BGN 219 mln in a month alone.

Like loans to companies, housing loans are also cheaper, compared to pre-crisis levels. Currently, households wishing to buy property with a mortgage loan in Euro are paying an average interest rate of 8.35% or nearly 0.5% less, compared to the interest rates in June 2008.

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