Банкеръ Weekly



The bank system has recorded its best financial result since 1997. According to BNB's statistics for 2004, the 34 credit institutions operating on the domestic market reported total profits of BGN434.1MN, which is BGN54.3MN (14.3%) up from the end of 2003. The three biggest banks in terms of assets - BULBANK, DSK Bank and United Bulgarian Bank (UBB) - accounted for more than half (52.3%) of it.The main source of this record high financial result were revenues from credits, which reached BGN1.1BN, up from BGN872MN in end-2003. The increase of banks' proceeds from extended loans is absolutely logical, considering their credit expansion last year. According to BNB's statistics, the aggregate amount of loans allocated in 2004 rose by 48%, from BGN9BN to BGN13.4BN. Mortgage credits reported the quickest growth - by 145% - rising from BGN408MN in the beginning of 2004 to over BGN1BN in the end of the year. Consumer loans grew up by 63% in the same period - from BGN1.7BN to BGN2.8BN. Expenses for provisions, however, increased considerably, amounting to some BGN407MN in the end of 2004, marking about BGN170MN (64%) growth from end-2003. The rise of provisions in fact signals that some of the regularly serviced credits are already overdue, which may be a result of the increasing indebtedness of the population. According to BNB's experts, there are no reasons for worries about the stability of the bank sector, but the executives of commercial banks should pay a special attention to the better management of the credit risk. In that connection the BNB intends to keep a tight rein on the growth of bank loans through a special package of measures for increasing their liquidity. The execs of big financial institution, on their part, are convinced that in order to raise their profits and market share they have to maintain the growth of crediting. For bankers it is the surest way to attract new clients and ensure rising assets. Therefore, the clash between them and BNB is imminent.

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