Banking System's Total Assets Up by 0.7% in Three Months

Banking System's Total Assets Up by 0.7% in Three Months

At the end of March the total assets in the banking system were BGN 59.5 billion. Compared to the end of 2007, assets increased by 0.7%, and against March 2007 – by 33.6% data of the Bulgarian National Bank (BNB) show.

Loans and receivables (including financial leases) marked a 2% growth in the first quarter and a 38.2-percent increase for a one-year period. The financial assets designated at fair value through profit or loss also registered an increase (10.2%) in the first three months of 2008.

A decrease is also evidenced in the cash and cash balances with central banks; and in the securities reported in financial assets held for trading; available for sale; and held to maturity.

The market share of the five largest credit institutions, or the Group 1 banks, increased slightly to 56.8% as at the end-March. The share of the Group 2 banks in the assets of the banking system stood at 38.1%, and of branches of foreign banks – 5.1%.

The gross loans and advances marked a quarterly growth of 2%, which may be put down mainly to the Group 1 banks. The development of this item was influenced by the reported decrease in the claims on credit institutions. The gross loans and advances stood at 46.8 bln euros as at the end of March 2008, up by 38.4% year on year.

loans to corporations increased by 6.8% in the first quarter of 2008, while retail exposures rose by 7%. The highest growth rate was reported by mortgage loans (7.8%). For a year, the corporate segment has increased by 58.2%, thus holding a prevailing share in the loan portfolio of the system, retail exposures increased by 55%, and mortgage loans – by 61.2%.

A review of the classification structure of classified exposures in the first three months of 2008 marked a slight decrease in the share of the highest risk group of („non-performing”) loans at the expense of an increase in the group of „watch” exposures.

The attracted funds in the banking system, in the form of financial liabilities at amortized value; held for trading; and designated at fair value through profit and loss amounted to 52.2 bln euros as at 31 March 2008.

In the quarter, the attracted resources in the system marked an insignificant drop, but within a 12-moth period they recorded a 33.3% growth approximating asset growth. At the end of the first quarter, the deposits of individuals and households were the largest segment of attracted resources with a share of 38.1%. For the first three months of 2008 they rose by 4.6%, and for a year – by 30.2%.

The balance sheet aggregate total capital increased by 4.9% in the first quarter up to BGN 6.5 billion. Within a year, it reports a 43.5% growth, thus outpacing asset growth.

The risks assumed as of March 2008 are adequately covered in most of the credit institutions. The ratio of overall capital adequacy of the banking system at the end of the first quarter is 14.5% (against 13.8% as of December 2007).

The liquidity in the banking sector as of March 2008 is good. With regard to the impact on the system of new factors of external and domestic nature, however, changes are needed in the forecasting and management of liquidity risk.

The profit of the banking system stood at 359 million leva as at March 31, 2008, up by 50.2% year on year.

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