In the first month of 2011, no changes were evidenced in the past year's trends of development of the banking system, which remains stable, BNB data show. The liquidity position of the banking sector stays adequate to the structure of attracted resources. The ratio of liquid assets to total liabilities as of end-January was 23.76%.

Irrespective of the reported impairment during the month (BGN 111 million), fully covered by the income from core activities, the credit institutions in Bulgaria started 2011 with a positive financial result, generating in the first month of the year a net profit of BGN 46 million. It complements the retained earnings from 2010 and strengthens the capacity of the system and of individual banks to offset the negative impact of the deteriorating loan portfolio.

At the end of January, the total assets in the banking system decreased slightly by 0.3% to BGN 73.5 billion, under the impact of seasonal factors. An increase was registered in the securities in portfolios held for trading and designated at fair value, with a concurrent decrease in those available for sale and held to maturity. No significant changes were evidenced in the market positions by groups of banks and in individual credit institutions.

During the month, gross loans and advances (excluding those to credit institutions) increased by 0.3% (BGN 177 million). Corporate loans grew by 0.4% (BGN 150 million), while retail exposures decreased by 0.3% (BGN 48 million). The consumer segment dropped by 0.4% and housing mortgage loans - by 0.1%. The remaining loan portfolio items (such as central governments, credit institutions and non-credit institutions1) evidenced a monthly growth.

Attracted funds registered an insignificant decrease of 0.6% (BGN 350 million). The growth trend of deposits from individuals and households continued in January with a 0.7% increase (BGN 200 million), and the resources from institutions, other than credit ones grew by 2.9% (BGN 563 million). Consequently, the share of sources of funding from residents continued rising and reached 76.9% of total attracted funds at the end of January.

Compared to December 2010, the balance sheet capital of the system increased by 0.6% to BGN 10.1 billion, with a 6.9% growth for the past 12 months. The monthly growth is mainly contributed to the current year income, supplemented by the reserves (including retained earnings).