Bankers forecast a surge in lending to SMEs

“Loans to small- and medium-sized enterprises (SMEs) will significantly increase this year,” Kristofor Pavlov, Chief Economist of UniCredit Bulbank, commented when presenting the estimates of the financial institution. The financing of SMEs will be at a much better level in 2013, mainly due to the launch of several initiatives, financed with EU funds.

The growth of corporate credits as a whole will remain at approximately the same level as in 2012 (about 5%). Moreover, according to the analysis of UniCredit Bulbank, loans for agriculture will continue to grow at a double-digit pace in 2013.

The bank’s analysts expect a reduction in the interest rates on both deposits and credits as a result of the improvement of Bulgaria’s economy and that of Europe as a whole.

Financial indebtedness will continue to decline in most EU countries. However, it will remain high in Bulgaria’s corporate sector due to the high concentration of debt in certain sectors of the economy at the beginning of the crisis and the fact that the reduction of financial indebtedness is principally a slow process.

In 2013, bad loans will remain almost unchanged from a year earlier as a percentage of all extended credits, analysts believe. Provisions for the whole year are expected to reach BGN 1.17 bn. The net profit of the banking system is likely to drop by 17% on an annual basis to BGN 471 mln at the end of 2013, according to UniCredit Bulbank. Thus, the return on equity will remain under its price for a fifth consecutive year.

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