Erste Bank: Bulgaria's 67% Credit Growth Highest In CEE In 2007

Erste Bank: Bulgaria's 67% Credit Growth Highest In CEE In 2007

The credit/deposit ratio in the countries in central and eastern Europe is lowest in Hungary – 127% at the end of 2007, according to research by Erste Group Bank.

Second on this indicator is Romania – 122%. According to the bank's analysts this makes the two countries most vulnerable to the effects of the global mortgage crisis.

Bulgaria's ratio stands at 83%, which puts our country in the middle of the list.

The ratio is quite different in the countries in southeast Europe, ranging from 61% in Albania to 108% in Croatia and 107% in Serbia.

In terms of credit growth our country ranked first in the region in 2007 with a 67% increase, which was mainly due to more loans in the business sector (77% ).

Romania is second, with a 64% hike in credits last year. The increase is highest in the sector of household crediting – 83%.

However, the number of deposits in Bulgaria and Romania was not growing at such pace, which makes their 2007credit/deposits ratios considerably higher than in 2006.

Both countries have high current account deficits which is a reason for worries, Erste Group points out.

And while Bulgaria and Romania are attracting significant foreign investments at the moment, their financial future will depend on their ability to lower the current account deficit.

In spite of the growing number of credits, their size versus national GDP is still relatively low compared to that of the EU countries, while above the average in CEE. This ratio stands at 86% in Bulgaria, while the average for the 14 countries in CEE surveyed by Erste Bank is 61%. In Romania and Serbia it is 51%, and is even lower in Russia and Poland – 53% and 69% respectively.

Croatia and Slovenia have the highest ratios in the CEE – 121% ans 117% respectively.

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