Fast loans become smaller and their maturity - shorter

The average size of the so-called fast loans, extended by non-bank institutions, has decreased in recent months and the term of their repayment has become shorter in general, showed a survey of Profi Credit on the Bulgarian market for this type of loans. Short-term consumer credits account for an increasing share of the portfolio of non-bank financial institutions at the expense of products with a longer repayment period. This is one of the trends observed on the market of small loans up to BGN 5,000 (the average size being BGN 500). There is a change in the structure of the portfolio - the share of credits maturing in less than a year grew at the expense of longer-term small loans. Over the past two years, short-term loans repayable within a year have been the fastest growing non-bank segment, according to Profi Credit.

Another trend is the increasing number of companies offering small loans. According to the latest data of the Bulgarian National Bank, these are already more than 200 throughout the country, although the largest ones are only 15-20%. On one hand, this increases competition and should result in higher-quality services offered by the branch. However, there are testimonies of clients about not so professional practices and cases and all this is to the detriment of the reputation of the whole sector, commented Profi Credit.

The company has established that the rapid overall growth of fast loans in Q1 2012 was followed by a decline in Q2 and Q3. However, small fast credits are expected to register an increase in Q4 in view of the Christmas season.

Data about the fast loans sector also shows a trend of an increase in the amount of overdue credits. Presumably, the profile of customers of non-bank financial institutions is much riskier than of those of the banking sector and this is a prerequisite for the relatively high share of non-performing credits. In the short term, the share of bad loans in the portfolios of non-bank financial institutions, which is currently 25% on average, is expected to increase.

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