Bulgaria's banking system closed the third quarter of the year with preserved capital buffers, retaining its liquidity position and good yield levels, data of the Bulgarian National Bank (BNB) show. The reported increase of classified exposures was within the values registered in the recent three quarters. At the end of September the share of exposures past due more than 90 days in the gross loans (excluding those to credit institutions) was 10.61% (against 9.45% as of June), and the reached credit risk levels were manageable.

The growing impairment costs (amounting to BGN 947 million at the end of the quarter) continued to impact the profit of the system - amounting to BGN 476 million as of end-September. The banks booked 14 mln. leva profit for September, compared to 61 mln leva profit for August.

Within the quarter the total capital adequacy ratio decreased slightly to 17.80% (against 18.03% as of June). The measures pursued by a number of credit institutions for further strengthening of their capital position were a prerequisite for preserving the levels of Tier 1 capital and of capital surplus in the banking system (almost BGN 3 billion as of end-September).

The liquid assets to total liabilities ratio has not changed either, compared to June, staying at 22.2% as of 30th September 2010. All banks comply with the liquidity level recommended by the BNB with regard to coverage of funds attracted from individuals and households and institutions other than credit ones.

In the third quarter no change was evidenced in the factors influencing banking business. The registered 1.6% growth in the assets to BGN 72.1 billion was also impacted by the repurchase of loans. The increased attracted funds were invested both in loans and in securities - mainly Bulgarian government securities. At the same time, a 6.0% increase is evidenced in the credit institutions' cash. These developments strengthened the market position of the group of medium and small credit institutions up to 39.8%.

Gross loans and advances increased by 1.4% in the quarter. The growth of loans to corporations (by 2.3%) was influenced by the return to the system's balance sheet of loan portfolios previously sold. Banks reported an increase in the housing mortgage loans (0.7%), while consumer loans registered a 1.1% decrease.

Attracted funds increased by 1.3%, with an increase in those from credit institutions, institutions other than credit ones, and from individuals and households. In the quarter, the deposit base growth fully compensated the decrease resulting from maturing short-term and long-term financing and repo transactions. The deposits from individuals and households increased by 1.5%, and those from institutions other than credit ones - by 0.6%. The resident structure of the sources of funding of banking operations remained as in June, and as of end-September the resources from nonresidents were a quarter of total attracted funds. In the reporting quarter the balance sheet capital of the system increased by 1.7%, owing to the current year income. Issued capital grew by 1.4% and revaluation reserves - by 1.9%.