The Bulgarian banking system managed to preserve its formed capital buffers during the last quarter of 2010 and as of end-December reported good financial indicators, as well, BNB data show. The share of exposures past due more than 90 days in gross loans (excluding those to credit institutions) increased to 11.90% (relative to 10.61% as of September), at a decreasing rate compared to the previous quarters.

Impairment costs increased in parallel, reaching BGN 1317 million (by 26.6% more compared to end-2009). The income from core activities allowed the banks to cover the higher credit risk and the related additional impairment costs. The banking system ended 2010 with a net (unaudited) profit of BGN 617 million, which although lower than the previous year, serves as an additional capital buffer.

The level of Tier I capital remained unchanged throughout the quarter (15.24%), while the total capital adequacy ratio fell slightly to 17.48% (compared to 17.80% as of September). The capital surplus stood at BGN 2.8 billion. Relative to September, the liquid assets to total liabilities ratio, calculated as per BNB Ordinance 11, improved by 2.2 percentage points to 24.37% and is a guarantee of an adequate level of financial intermediation.

As of December, the total assets in the banking system were BGN 73.7 billion, or 2.2% more than in the third quarter. An increase in cash and securities portfolios was registered, with shares of 9.9% and 7.4%, respectively, in the system's balance sheet total at the end of year 2010. The banking system's asset grew by 4% on a yearly basis. Over the same period, the five largest banks decreased their market positions by 3.5 percentage points to 54.5% of the system's assets, while the group of small and medium credit institutions reached a share of 40.7%.

Over the period September - December, gross loans (excluding those to credit institutions) increased by 0.7% (BGN 388 million) and at the end of 2010 amounted to BGN 53.9 billion. Over the reported quarter, corporate loans went up by 1.2%, while retail exposures dropped by 0.1%. Housing mortgage loans recorded a 1.3% growth, unlike consumer loans, which fell by 1.4%. Over a one-year horizon, gross loans (excluding those to credit institutions) increased by 2.7% (BGN 1.4 billion), evidencing growth in all segments except for consumer and non-credit institutions' portfolios1.

During the fourth quarter, attracted funds increased by 2.3% and as at 31.12.2010 reached BGN 63 billion. Deposits from individuals and households increased by 5% (BGN 1.3 billion), and the resources from institutions other than credit ones - by 1.1% (BGN 207 million). As of December 2010, the local sources of funding of banking operations contributed to 76.3% of total attracted funds in the system. Over the year, the attracted funds in the banking sector increased by 3.6%.

Compared to December 2009, the balance sheet capital of the system increased by 6.1% to BGN 10 billion, with a registered growth of 3.5% for the last quarter. A contribution to that had the current year.