Bulgarian bankers: Lending is almost coming to a standstill, hampering economic growth

The big problem of the economy is low consumption and the reluctance of people, on the one hand, to be encumbered by loans, despite the banks‘ activity and, on the other hand, their unwillingness to withdraw funds from their savings accounts. This is how CIBANK CEO, Peter Andronov, explained in an interview for Klassa daily, the feeble growth of crediting in our country. According to BNB (Bulgarian National Bank) data, at the end of August, the volume of loans extended to households declined by 0,4% to a total of BGN 18.98 bn, while the volume of credits to the business sector increased by over 6% to BGN 32.41 bn. "Recently, the disbursement level has been substantially higher than the one normally observed over the years. People are in a hurry to pay their loans, while the amount of the newly released ones is not so high as to prompt an overall increase of the credit portfolio, maintained Andronov.

His forecast for low loan demand was also confirmed by other bank experts. The latest forecast of MKB Unionbank indicates that the tendency towards lower indebtedness levels on the part of households and businesses, compared to the levels of the pre-crisis years will continue. The latter will inhibit economic growth next year, which banks estimated at 3%. In general, households will likely remain cautious in terms of their financial decisions and consumer behaviour in the short to the medium term, according to the outlook of UniCredit Bulbank.

Deposits, as the next way to stimulate consumption, also appear obstructed. Instead of withdrawing money from their savings deposits, people, on the contrary, are setting aside even more funds. At the end of August, Bulgarian citizens deposited a total of BGN 46.83 bn in their bank accounts, which marked a 12.6% growth.

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