Imminent 15% peak of bad loans in Bulgaria expected The peak of bad loans in Bulgaria will be this year, predicted Kristofor Pavlov, Chief Economist at UniCredit Bulbank at the Euromoney Forum held in Vienna. In his words, in the countries where larger economic decline has been registered, the peak of bad loan receivables is imminent. UniCredit estimates indicated that the ten largest banks in Bulgaria can cope with the increasing non-performing credits even in a range of 20% -25% without needing to raise additional capital. "We do not expect this to happen. However, on a separate note, it shows the stability level of the sector," said the economist. He predicted that loans in arrears over 90 days could reach about 15% this year as opposed to just over 10% at the end of 2010. In contrast to Bulgaria, Poland, the Czech Republic, Slovakia and Slovenia, where the recovery process has advanced, the peak of bad loans passed already in the second half of 2010. Violina Marinova, Chairwoman of the Association of Banks in Bulgaria and Executive Director of DSK Bank, also confirmed to Klassa that we could witness growth in bad loans but it will be slow-paced. "Banks have sufficient capital buffers, the system is stable, and the expected recovery of the economy should be also taken into account," explained the expert. "The peak of bad loans was in 2010. Of course, it is impossible to make these go away with a magic wand but, at least, the worst is already behind us," commented Emil Vuchkov, Marketing and Product Policy Director at the MKB Unionbank. In his words, this year, the problematic loan receivables will stop becoming larger and we will even witness a decrease in the second half of the year.
Source: Class (20.01.2011)

Banking system profits decrease by over 20% to BGN 617 mln The profits of the domestic banking system decreased by over 20% last year, according to the Bulgarian National Bank (BNB). Financial institutions in the country ended 2010 with an unaudited profit of BGN 617 mln, or BGN 163 mln down from 2009. According to BNB experts, although lower than the previous year, this is a sort of additional capital protection. Data showed that in a year, depreciation expenditures rose by 26% to BGN 1.31 bn but, nevertheless, revenues from main activities covered the increased risk and costs. At the end of December, non-performing loans overdue for more than 90 days reached 11.9% of the total volume of credits, almost double the level from a year earlier when their share was 6.42%, according to BNB statistics. According to financial institutions’ reports presented by BNB, only two banks in our country ended 2010 with profits exceeding BGN 100 mln – UniCredit Bulbank and DSK Bank, with BGN 158.7 mln and BGN 130.58 mln, respectively. In 2008, three banks reported profits of more than BGN 200 mln, and in 2009, three financial institutions had profits exceeding BGN 100 mln. An interesting shift was observed in the following positions, Corporate Commercial Bank displacing United Bulgarian Bank (UBB) from the third place and achieving a 23% profit growth to BGN 74.4 mln. Let us remind our readers that this financial institution ranked 8th in terms of profits in 2008 and climbed to the 4th position in 2009. Meanwhile, the profit of UBB shrank by 26.5% to BGN 73.6 mln.
Source: Class (01.02.2011)

Banks rely on non-standard offers in the struggle for customers In the first months of 2011, banks started to compete for customers but now with non-standard offers differentiating by non-price criteria, showed a study of Klassa on actual bank proposals. "Loosening the criteria for lending may take place not earlier than the end of the year, when lower interest rates and taxes will not be a sufficient incentive," commented bankers. "As we predicted on several occasions, in 2011 banks will continue to try to differentiate by non-price criteria, especially when it comes down to mortgage lending. While in 2009 and 2010 it was enough for a bank just to advertise its loan products, now with so many banks on the mortgage market non-price differentiation is the key to success," confirmed to Klassa officials from MKB Unionbank. "At present, after almost 2 years of crisis, many customers do not have enough savings to ensure sufficient money for own participation in the purchase of a home. Therefore, we went on the market with one of the highest rates of real funding - 90%. We do not collect an application fee as well," bankers emphasised on their last promotions. Last year, MKB Unionbank launched a national information campaign, whereby customers were given a gift - a mortgage compass which enables clients to compare the bid of MKB with that of other banks. A specially prepared booklet with answers to frequently asked questions, recommendations and advice, was another promotional tool. A few days ago, UniCredit Bulbank announced its campaign providing for payment of electricity bills for a period of over half a year for customers with new home loans. Moreover, the financial institution has improved its interest rates on all mortgage loans which will be approved until May 31, as the interest rate for the first year is set to 6.10%. The fee for early repayment is suspended as well. Moreover - the bank will organize and throw a party for 10 customers who buy a new home through the product "First Home" with Maria and Rachkov. UniCredit officials promise the parties to be attended by their VIP guests - Maria Ignatova and Dimitar Rachkov. In its last promotion, DSK relies on lower interest rates. The campaign is valid as of April 8 and the maximum amount of the consumer credit to be borrowed is BGN 35,000. The collateral security is a pledge on employment receivables, on pensions or guarantees, and the number of guarantors depends on the size of the loan. The management of FiBank (First Investment Bank) is still following winter trends. For example, when paying by MasterCard YES, MasterCard PayPass credit cards or by Maestro PayPass debit cards issued by the bank, customers receive a 5% discount in some shops in the town of Bansko. In the period from January 14 to February 15, one payment via POS terminal by MasterCard YES credit card gives the client a chance to watch live the Ski Cup Feb 25-27 in Bansko, to participate in the lottery for 50 winter jackets or 100 caps. Alpha Bank even offers, until the end of March, an Alpha "Mortgage loan" without charges for application and approval. Moreover, in the period February 1 - Mart 31, customers receive a 50% discount for early repayment fee. So the fee is reduced up to 2.5% for the first 5 years, and then the fee payment is suspended.
Source: Class (09.02.2011)

No more promotions for loans and deposits The first month of the year outlined the end of a number of promotions for loans and deposits in the banking financial sector, showed an analysis of the financial guide My Money. According to the experts, the changes in deposits have again shown the course of banks, namely, lower interest rates and in some cases - elimination of some products due to the expiration of the promotion period. The interest in terms of loans was also centered around various promotional offers. Some of them expired in January and others were extended. As a whole, analysts reported that the end of January did not lead to new and more favourable proposals for bank customers. In the first month of 2011, five banks in the country suspended their promotions for their savings products, My Money specified. DSK Bank suspended its promotional offers and restored the standard interest rates. At the beginning of January again, Raiffeisenbank adjusted downwards its interest rates on time deposits, the short-term Deposit 3+3, the standard term deposits of natural persons and Deposit +. UniCredit Bulbank suspended its campaign for standard time deposits and the Nine and a Half Weeks deposit. Three banks made changes in relation to their consumer credits. Although, there is a certain stir-up in this segment, the activity is still far below the level which can outline a trend, experts commented.
Source: Class (22.02.2011)

Non-performing loans in the banking system hit a new peak at the beginning of the year. Bad loans of companies and households exceeded BGN 7.5 bn at the end of January or increased by 67%, compared to a year earlier, but only in a month, they increased by BGN 352 mln, according to information of BNB (Bulgarian National Bank).In the late summer and early autumn last year, there were positive signals that the growth of bad loans was finally over. Since October, however, the upward trend has resumed. Thus, according to BNB, the extension of problem loans has accelerated again. Bankers’ forecasts were similar. According to them, non-performing loans will continue to grow until the middle of this year and then they will gradually start to return to their normal levels. Experts from the National Bank reported that, at the end of January, the total volume of non-performing loans was 18.95% of the total amount of all loans extended, without bank overdrafts, (BGN 39.720 bn). According to the information released, businesses face most difficulties in servicing their liabilities, since every fifth company or some 20.55% have non-performing loans. Consequently, bad corporate loans reached a total of BGN 4.64 bn, compared to BGN 2.4 bn a year earlier. The rising trend in consumer loans was maintained and at the end of January 2011, these were nearly BGN 1.3 bn or 17.2% of all funds extended. Out of all mortgages amounting to BGN 8.7 bn, non-performing ones stood at BGN 1.39 bn, or 16%. Non-performing housing loans increased by nearly 50% on an annual basis. According to BNB data, in January, the total amount of loans extended in Bulgaria reached BGN 51.644 bn. Compared to the first month of 2010, the increase was merely 1.6% but economists are optimistic because there was some growth. The experts from the National Bank noted that businesses continue to be the primary users of loans. They borrowed loans amounting to BGN 31.766 mln. By contrast, households have reduced their loans. At the end of January, the total amount of withdrawn funds was BGN 18.921 bn and, compared to the same period last year, these decreased by 0.7%. The decline was mainly due to the smaller number of consumer loans. These were 2.4% less on an annual basis, while housing loans increased by 3.4%.
Source: Class (24.02.2011)

Cyberattack attempts to drain UniCredit Bulbank's client accounts By using dangerous cyberattacks, online fraudsters attempted to drain the accounts of the clients of the largest Bulgarian bank - UniCredit Bulbank. The so-called phishing emails were sent to the bank's clients. They were informed of a blocked session of the Bulbank Online System and were asked on behalf of the bank to follow the link in the letter so as to avoid permanent suspension and blocking of their account. The link leads to a webpage that resembles the one of UniCredit Bulbank, but has none of the bank's verification certificates. Besides the introduction of a username and password, the phishing letter requires credit card number and even PIN code. In case you have received an e-mail informing you of a blocked session in the Bulbank Online System and asking you to follow a link, we inform you that this phishing letter was not sent by UniCredit Bulbank and you should not follow the instructions in the letter, reacted instantly the Unicredit Bulbank. "If you, by chance, have entered a username and password, it is recommendable that you log on to the website of Bulbank Online and immediately change your password. If you have already provided the number of your credit card and PIN code, immediately block your card," emphasised also from the bank. Hours after the submission of signals for the phishing attack, the Unicredit Bulbank specialists blocked the fraudulent link. The bank's officials assured that all necessary preventive measures have been taken and the deposits of their clients have already been protected. Nevertheless, if the bank detects that money have been drawn illegally, it will reimburse the savings of the clients, indicated also the financial institution. The cyberattack against UniCredit Bulbank occurred only three months after another Bulgarian bank, DSK Bank, warned of a phishing raid against its clients.
Source: Class (19.04.2011)

The European Bank for Reconstruction and Development (EBRD) has agreed to extend a 10 million euro credit line to Bulgarian DSK Bank to support energy efficiency and renewable energy projects in the country, DSK said on April 28 2011. The funds will be on-lent to local privately-owned companies that are taking up sustainable energy investments, the statement said. The financing is part of EBRD's Bulgarian Energy Efficiency and Renewable Energy Credit Line programme. EBRD has so far granted 137.5 million worth of credit lines to Bulgarian banks, which have been channelled into more than 140 small energy efficiency and renewable energy projects, helping Bulgarian businesses save more than one million MWh of electricity a year, DSK said.
Source: Dnevnik (29.04.2011)

The profits of Bulgarian banks compensate the losses from the crisis The profits of banks compensate the losses from the height of the financial crisis. During the first three months of the year, they reported a positive financial result of BGN157 mln, compared to the profit of BGN 170 mln for the same period of last year and BGN 271 mln in January-March 2009, according to BNB (Bulgarian National Bank) data. This makes BGN 1.74 mln a day, while only in March the positive financial result was BGN 70 mln. The accumulated capital surplus was BGN 2.9 bn and the total capital adequacy ratio stood at 17.66 %, indicated further the National Bank. In March, the observed downturn trend from the end of the previous year was confirmed. It relates to the decreased growth of classified assets (non-performing loans) since they increased with twofold lower pace than that in the last three months of 2010. The proportion of those with arrears of more than 90 days in terms of gross loans (excluding those extended for credit institutions) rose by 12.93%. The banks allocated another BGN 299 mln for covering the depreciation of assets, whereas in March merely, the projected sum was BGN 85 mln, indicated also the statistical data. The generated financial and operating revenues in the first quarter provided coverage of both asset depreciation and the remaining costs of the banks. As regards the market shares and assets, there is no change in the first Top 5, involving UniCredit Bulbank, DSK Bank, United Bulgarian, Raiffeisenbank (Bulgaria) and Eurobank EFG. In late March, they held 53.9 % of the assets of the bank system. Nevertheless, BNB highlighted the stronger activity of the medium-sized and small banks, which again enhanced their market shares at the expense of the group of the largest institutions.
Source: Class (02.05.2011)

The Ministry of Finance will buy 2, 000 Central Depository AD (CDAD) shares from BNB, it transpires from a central bank statement. The said shares comprise 20% of the Depository’s capital and the Ministry will pay BGN 200, 000 for the acquisition. Once the transfer is complete, Dyankov’s administration will control 41.9% of CDAD (or 44.9% via BSE-Sofia). If we add the Privatization Agency’s 1.8% stake in CDAD, it turns out the state will control a good 46.7% in the Depository. According to late 2009 stats, there is a list of commercial banks with shares in CDAD – Raiffeisenbank, Societe Generale Expressbank, DSK Bank and UniCredit Bulbank (5% each), CCB (5.1%), Eurobank (4.5%), ING Bank (3%), Cibank (1.8%), UBB (1.5%), Investbank (1.4%) and IABank (1.2%), etc.
Source: Standart (13.05.2011)

By end-April Bulgarian banks posted a profit of BGN 214 million, the Bulgarian National Bank statistics shows. The bank system’s profit lost 1.7% on an annual basis. Raiffeisenbank registered the highest result – BGN 33.612 million, followed by UniCredit Bulbank with BGN 33.201 million and DSK Bank with BGN 24.468 million, according to data of the central bank by 31 March. 7 from the total of 30 financial institutions operating on the Bulgarian market underwent losses, Alpha Bank suffering the most with a loss of BGN 12.6 million. Bulgarian American Credit Bank (BACB), a major share of which was recently acquired by Tsvetelina Borislavova, former Chairwoman of CIBank’s Supervisory Board, also registered a loss of BGN 7.189 million. The growth rate of resources attracted by the Bulgarian bank system from households has also slowed down compared to previous months. By end-April they amounted to BGN 28.8 million, while their volume was BGN 28.8 million in March and BGN 28.2 million in the beginning of the year. Bad and restructured credits gained BGN 140 million in April to a total of BGN 7.74 billion.
Source: Standart (01.06.2011)

Europa Capital buys Mall of Sofia for 100M euro Real estate fund Europa Capital will acquire the Mall of Sofia in a deal worth 100 million euro from its current owners GE Real Estate and Avestus Capital Partners, a media statement announced on June 8 2011. Europa Capital is part of the Rockefeller Group. The deal will be financed by the Hungarian bank OTP and the Bulgarian DSK, although once the purchase goes through, the mall will continue to be managed by Avestus Capital Partners, the report said. This is Europa Capital's second major deal in Bulgaria, after the real estate fund purchased the Retail Park Plovdiv for 20 million euro. Mall of Sofia is in the centre of Sofia, on the junction of Stamboliiski Boulevard and Opalchenska Str. It was opened on June 9 2006, consisting also of the complex is Sofia Tower, an office building located just above Mall of Sofia. The mall is four storeys tall and has a total built up area of 70 000 sq m of which 35 000 sq m are allocated to commercial and entertainment. About 10 000 sq m have been allocated to offices. Additionally, the underground car park comprises about 22 000 sq m with capacity for 700 vehicles. The remainder 8000 sq m is occupied by service and common areas.
Source: Dnevnik (09.06.2011)

Company of the Rockefeller Group acquires Mall of Sofia for ˆ100 mln “Europa Capital LLP, part of the Rockefeller Group, has entered into agreement to acquire the Mall of Sofia from GE Real Estate and Avestus Capital Partners,” reads a message on the Internet site of Europa Capital. The investment exceeds ˆ100 mln. This is the second deal of Europa Capital in Bulgaria after the acquisition of the Retail Park Plovdiv for ˆ20 mln in February. The Irish Avestus Capital Partners Group will continue to manage the mall after the transaction. OTP Bank and DSK Bank will finance the acquisition. CMS Cameron McKenna and CB Richard Ellis / MBL were Europa Capital's consultants in the transaction. Europa Capital manages funds for investments in real estate and has several offices in Europe. "We are pleased to be able to make an investment in one of the most attractive facilities in the region. The Mall of Sofia has excellent trading history, combined with the opportunity for improving its tenant mix and performance in future," said Henry Morris, responsible for acquisitions at Europa Capital. The company owns six funds that have raised and invested over ˆ7 bn in 70 deals in 18 European countries since 1995. “There was another candidate for the purchase of the mall as well, who withdrew at the last moment,” commented people close to the transaction. Some three years ago, the German Degi was expected to sign a deal for the acquisition of the mall for ˆ110 mln.
Source: Class (09.06.2011)

Societe Generale Expressbank is Bank of the Year Societe Generale Expressbank is Bank of the Year 2010 in the 14th annual contest organized by the Bank of the Year Association. "The winners in the various categories are selected on the basis of the reports that banks submit to the Bulgarian National Bank," stated Valentin Panayotov, President of the Association. According to him, this year, the evaluation of the financial institutions was carried according to three equally important criteria - market share, growth dynamics and bank efficiency. "Banks survived the crisis without serious problems," said Philippe Lhotte, CEO of Societe Generale Expressbank. According to him, Bulgaria has a very good image abroad. He added that “users should not worry about borrowing”. UniCredit Bulbank is winner in the Client’s Bank 2010 category, receiving 11,000 votes out of 45,000 possible . Citibank N.A. got the Best Bank Branch in Bulgaria award. This year’s Development Dynamics award, distinguishing the institution with largest growth, went to the Corporate Commercial Bank. The Mystery Client category was introduced for the first time and Raiffeisenbank Bulgaria is the holder of the prize. Quality of work and services were the main selection criteria under this category. "More than 500 branches all over the country have been checked twice to select the winner," said Panayotov. DSK Bank received the recognition for Efficiency and the Market Share prize went to First Investment Bank.
Source: Class (07.07.2011)

Societe Generale Expressbank, part of French banking group Societe Generale, was named Bank of the Year for 2010 in the annual ranking of the Bank of the Year Association, the organisers of the competition said. The association will also give awards for dynamic development, efficiency, market share, customer bank, best foreign bank branch, as well as its new established prize, the secret client award. UniCredit Bulbank was named bank of the customer, scooping 11 655 votes on the association's website. Citibank Sofia branch won the best foreign bank category. Corporate Commercial Bank was rewarded for best dynamics, while Bank DSK was declared the most efficient lender on the market. First Investment Bank (Fibank) was named best financial institution in terms of market share, while Raiffeisenbank scooped the secret client award.
Source: Dnevnik (07.07.2011)

OTP Bank expects 3.4% growth of Bulgaria’s economy Bulgaria’s economy will grow by 3.4% in 2012-2015, according to an analysis of OTP Bank, owner of Bulgarian DSK Bank, presented on Wednesday in Budapest. Unlike forecasts of other financial institutions, OTP says that our economy will move along with that of Romania. The Ukraine will be the region’s champion in that period, with estimated growth of some 4.7%, followed by Russia (4.2%) and Hungary (3.6%). The analysis of the Hungarian banking group is close to the estimates of other institutions. UniCredit Bulbank expects GDP growth in our country to accelerate to 3.3% on an annual basis in 2012, Eurobank EFG Group forecasts more than 2.5% growth for 2011, and the consulting company Ernst & Young predicts a 3.2% growth this year, expected to accelerate to 4.8% in 2012 and to 5.6% in 2013. According to the European Commission, Bulgaria’s economy will grow by 2.8% this year and by 3.7% in 2012. The estimates of financiers from OTP for the banking sector show that it will increase by some 12% in the coming years. The Ukraine is again the champion in terms of this indicator. Its banking sector is expected to grow by 18.7% until 2015, but this is mainly due to the fact that it is not sufficiently developed at present. Despite the good forecasts for this country, however, experts believe that it is most difficult to do business there. Moreover, consumer lending is very well developed in the Ukraine and Russia, but the other segments are still gaining momentum. Sandor Csanyi, BoD Chairman of OTP Bank, denied rumours that OTP was planning to sell its Bulgarian subsidiary. “On the contrary – we will continue to develop and support DSK. The region on which we have focused is very important to us and we are willing to become serious players in the sector,” stated Csanyi.
Source: Class (08.07.2011)

Bulgaria's financial market has started to see an increase in demand for consumer and housing loans, according to a survey among local banks. However, the slight revival is still early to be considered a positive sign for the sector's recovery, said representatives of DSK Bank, Postbank, UniCredit Bulbank, Societe Generale Expressbank, United Bulgarian Bank (UBB), CIBank and Piraeus Bank. Despite the rise in applications for consumer loans, there has not been a significant increase in the number of loans given, according to the survey. Emil Angelov, deputy executive head of Piraeus Bank Bulgaria, said that the number of requests for housing loans in the past two quarters was higher than in the corresponding quarters of 2010 and 2009. The same trend has been observed in the consumer loans. Postbank and CIBank also have recorded increases both in consumer and housing loan applications since the start of 2011, while DSK Bank registered a spike in consumer lending in particular, which, however, is still not indicative of a steady trend. In turn, Societe Generale Expressbank reported a 50 per cent increase in consumer lending and a 40 per cent growth in housing loans. Bulgarian National Bank (BNB) data for May 2011 shows that consumer lending increased for a third month in a row, but at an insignificant level - by 11 million leva in March, three million leva in April ans 15.5 million leva in May. As to housing lending, there was a 2.6 per cent on an annual basis.
Source: Dnevnik (18.07.2011)

MRDPW to select the banks crediting the Residential Housing Rehabilitation Programme The Ministry of Regional Development and Public Works (MRDPW) will organise a tender for banks which will credit the Residential Housing Rehabilitation Programme, announced yesterday Minister Rosen Plevneliev. The main criteria for the selection of the banks will be the lowest interest rate offered and the most beneficial credit guarantees. All banks will be invited to bid in the tender. The Regional Ministry has scheduled the tender procedure to commence as of September, while the contracts with banks should be concluded by December this year. Our participation will depend on the General Terms and Conditions that will be proposed, commented Violina Marinova, CEO of DSK Bank. According to her, MRDPW will assume the risk provision but, nevertheless, the financial part remains the responsibility of the banks. If banks are unwilling to participate in the Residential Housing Rehabilitation Programme, MRDPW will grant the funds under the guarantee fund as direct loans, specified Rosen Plevneliev. The Department has planned for BGN 13 mln to be used as a guarantee fund with banks or other financial institutions, which will extend low-interest consumer loans. They will be intended for people who cannot provide resources for co-financing. MRDPW also requires from the banks to provide at least BGN 7 mln in addition to the BGN 13 mln allocated by the establishment as a guarantee fund, announced Deputy Minister Lilyana Pavlova. She explained that if the selected banks are not able to grant credits, they can become guarantors to other institutions that can provide such credits. A total of BGN 63 mln will be granted under Operational Programme Regional Development (OPRR) for the insulation of multi-family dwellings. A total of BGN 50 mln out of these funds will be extended as a direct subsidy, while the remaining BGN 13 mln will be used for the setting up of a guarantee fund. The financial aid for citizens will constitute 50% of the total amount needed for the insulation of one apartment. Loans that must be granted amount to BGN 3,000 – BGN 5,000. I do not expect banks which want a home mortgage loan for that amount to be approved in the selection, commented Plevneliev. The Sofia Municipality will donate to the people involved in the programme for the building's insulation, the rehabilitation of the green areas in front of the residential building. This is a pilot project in Sofia but I am convinced that other municipalities will also join in the initiative, said Plevneliev. He explained that the funds to be invested in the renovation of the gardens will be allocated from the budgets of the municipalities. So far, over BGN 13 mln have been granted for the insulation of private buildings under the Multi-family Housing Revitalization Demonstration Programme with the United Nations Development Programme (UNDP). This is the total amount invested and it includes state subsidies from the budgets of the Regional Office, along with the funds of district municipalities and civil co-financing.
Source: Class (26.07.2011)

According to BNB data for the first six months of 2011, eight banks report nearly BGN 53 mln losses Eight banks operating in Bulgaria reported BGN 52.67 mln losses at the end of the first six months of 2011, according to data of the Bulgarian National Bank (BNB). The number of financial institutions experiencing fiscal difficulties increased by 3 year-on-year, while financial losses rose by BGN 10.44 mln, showed the statistics. In late June, Alpha Bank, which registered a loss of BGN 25, 545 mln had the most severe financial hardship. Though it recorded the highest negative result in the banking sector, at the end of the period, its loss decreased by BGN 11.9 mln year-on-year. Bulgarian-American Credit Bank ranked second in terms of the registered financial loss of BGN 14.06 mln, followed by Investbank, which was indebted with BGN 6.77 mln. Among the banks with the greatest loss was Emporiki Bank. At the end of June, the credit institution recorded BGN 3,115 mln as a negative financial result or BGN 1.3 mln more year-on-year. The banks suffering losses also included NLB Bank Sofia JSC (BGN 2.36 mln), Teximbank (Texim Private Entrepreneurial Bank PLC) (BGN 436,000), Regional Investment Bank (BGN 227,000) and T. C. Ziraat Bank, Sofia Branch (BGN 149,000). The banking system reported a total profit of BGN 315 mln (BGN 35 mln in June alone). This is a good result, although nearly 30% lower than the profit registered for the same period of last year, reported BNB. The confidence indicator in the banking system is the increase in funds borrowed. The major resource for banks remained the deposits of citizens, whose share rose 45.6% of the funds borrowed. In the last three months, these increased by 1.5%, while at the end of June, they reached the impressive amount of BGN 64,304 bn, according to BNB statistics. Deposits recorded a growth of 2.1% only. It is an interesting detail that for the second three months of the year, a more tangible growth was observed in terms of Euro deposits. For the first two quarters, domestic financial institutions managed to accrue revenue from their main activity. The latter, according to experts, was enough to neutralise the major risks associated with problematic loans. The volume of bad loans also increased in the second quarter of the year, but their rate of growth has been slowing down. The share of exposures in arrears of over 90 days was 13.53%, compared to 12.93%, as of March 31. Meanwhile, Levon Hampartzoumian, Chairman of the Association of Banks in Bulgarian commented on BNT (Bulgarian National Television) that banks operate some of the few businesses which are actually the financial infrastructure of any economy. Therefore, they are subject to a very high degree of regulation. He explained that our banking system is much more stable due to the useful experience gained during the crisis. The banker added that interest rates will not drop until sustainable economic development is achieved. The main target for overcoming the crisis will be entrepreneurial activity and sustainable development, which is expected in Bulgaria after the crisis, added he. Hampartzoumian also explained the large amount of BGN 29 bn held in household deposits. "As long as people do not feel economic enthusiasm for doing their jobs and for making their business, they will abstain from spending. This is rational behaviour. Companies are also cautious with respect to making new investments. That is precisely why the crisis occurred but we do not really feel it," clarified the Head of ABB. On her part, Violina Marinova, CEO of DSK Bank, commented that bank liquidity in Bulgaria is over 25%, which is a good indicator of a stable banking system. People are still cautious and refrain from consumption. If we analyse the growth of bad loans, growth in the second quarter of 2011, compared to the first quarter was 0.6%. This percentage is significantly lower than every quarter of 2010, clarified Marinova. The faster Bulgaria joins the Euroarea, the better for it, said Hampartzoumian. He distanced himself from the opinion of the Finance Minister, Simeon Djankov, that, for now, we should not join the Eurozone in a hurry. According to the banker, the political and business sector should not interfere. His words supported Marinova's statement fully.
Source: Class (01.08.2011)

EBRD lowers its forecast for Bulgaria’s economic growth to 2.3% The European Bank for Reconstruction and Development (EBRD) has lowered its forecast for economic growth in Bulgaria to 2.3% in 2011. In May, the bank forecast growth of 3.1%, while next year's forecast suggested an acceleration in the economic recovery to 3.7%, according to its latest outlook for 29 countries from Europe and Central Asia. In general, experts reported that the crisis in the Eurozone exposed to serious risks the recovery and growth in the emerging economies on the old continent, especially in Southeastern Europe and the new EU member-states. However, the general forecast for the pace of development of the region is that it will be twice faster than the figures for Bulgaria - 4.8% (compared to 4.6% in May) and 4.4% for 2011 and 2012. Out of the seven countries in Southeastern Europe, including Bulgaria, Serbia will see the most substantial economic progress - 3.3% GDP growth in 2011 and 4.1% next year. The group is expected to record a total growth of 2.2% and 3.7% in 2011 and 2012, respectively. Recovery in Southeastern Europe, which still remains weak, is most directly affected by the financial instability associated with the debt crisis in Europe, warned the experts from the EBRD. This is mainly due to the subsidiaries of Greek banks. If the crisis escalates further, these institutions may be forced to ask for financial support and experience difficulties with the crediting of local economies. This can result in a substantial contraction in the economic growth in Southeastern Europe, experts say. Both for Bulgaria and Romania, the EBRD stated that the economic prospects are improving but still at a modest pace. According to experts, the Bulgarian economy managed to avoid the recession last year but recovery has slowed down over the first six months of the year. The assessment of the EBRD is close to the analyses of other financial institutions. According to UniCredit Bulbank, economic growth in our country will lose some of its pace in the coming months because of difficulties in the recovery process and the worse outlook for the global economy. Bank experts expect a growth of 2.8% and 3.3% in 2011 and 2012 on an annual basis. The analysts from OTP Bank, owner of Bulgarian DSK Bank, promise growth of 3.4% in the period 2012 to 2015. Eurobank EFG Group predicts more than 2.5% growth for 2011 and the consulting firm Ernst & Young sets a growth rate of 3.2% this year, which will accelerate to 4.8% in 2012 and 5.6% in 2013. According to the European Commission, Bulgaria’s GDP growth will reach 2.8% this year and 3.7% next year. At the same time, the Cabinet expects a growth of 3.6% in 2011, while IMF's forecast is for 3% GDP growth in 2011.
Source: Class (01.08.2011)

The formation of interest rates is unclear to about two-thirds of borrowers Nearly two-thirds of the consumers of banking services describe the formation of interest rates on loans as unclear, showed a study of Synovate, conducted in May 2011 and cited by Investor.bg, which involved 951 people between 18 and 69 years of age. About 59% of the respondents described the methodology for the formation of interest rates by banks as unclear, but every third respondent defined it as "totally unclear." Merely one-fifth of the respondents are aware of how interest rates are being set and merely 2% indicated that this process is "very clear". Perhaps, this is why most of the respondents specified that they wished their interest rates to be fixed - 52% opted for this option, while another 6% declared that they preferred floating rates. About 5% of the polled believed that it is correct for the rate to be formed on the basis of a fixed and a variable component. The Synovate survey showed that, in general, pessimism about the banking sector is on the rise again. Against this background, there is an increase in the proportion of people who expect a worsening of the economic conditions. DSK Bank is leader in terms of market positions in the country and every third person cites it as the first bank that comes to his mind. According to most of the respondents, the financial institution is the most popular bank on the market both in terms of its brand and advertising campaigns. Over 60% of the respondents said they had seen an advertisement of DSK recently. United Bulgarian Bank ranks second in the survey of Synovate (15%), followed by UniCredit Bulbank (9%), Postbank (8%), Raiffeisen Bank (9%) and First Investment Bank (6%). Finally, when asked about the first three financial institutions which they have in mind, the respondents pointed out DSK Bank, United Bulgarian Bank and UniCredit Bulbank.
Source: Class (27.09.2011)

Eurobank lowers its forecast for Bulgaria's economic growth to 2.9% At the end of the year, Bulgaria's economic growth will reach 2.9% of GDP, according to the recent report of Eurobank EFG Group, the owner of Postbank. The financial institution revised its growth expectations for our country, compared to the 3.2 % projected in March. The economic growth outlook for Bulgaria is again lower than the 3.6% forecast by the GERB (Citizens for European Development of Bulgaria) government. We remind our readers that, a few days ago, EBRD drastically reduced its outlook for domestic economic growth from 3% to 1.6 %. According to UniCredit Bulbank, domestic economic growth will slow down to some extent in the coming months because of difficulties in the process of recovery and due to the deteriorating prospects of the global economy. Bank experts expect economic growth of 2.8% and of 3.3 % on an annual basis in 2012. OTP Bank, the owner of Bulgarian DSK Bank, in turn, projected domestic economic growth of 3.4% for the period 2012-2015. According to the EC (European Commission), growth will reach 2.8% this year and 3.7% in 2012. The outlook for next year of Eurobank EFG Group envisaged that economic growth will reach 3.5%. As reasons for the revised data, the analysts' group indicated the negative prospects of the global economy, the ongoing debt crisis in the Euroarea and the macroeconomic data received from both sides of the Atlantic, which has reinforced concerns about the slowdown in the economic recovery of the USA and Europe. The recent data received from New Europe also showed that the pace of local economic recovery has started to slow down. The report noted that, after the dynamic start observed in the first quarter of 2011, Bulgaria's GDP growth slowed down in the second quarter to 2% on an annual basis, compared to 3.3% in the first quarter, but it remains above the EU average for a third consecutive quarter. Net exports were again the engine of growth in the second quarter, contributing most to GDP growth.
Source: Class (21.10.2011)

Demand for SME loans in Bulgaria has doubled over the past 12 months, experts say. Couple that with the available options for creditors to secure the money they lend via different guarantee schemes and you get the perfect setting for breakthrough offers in the segment. Thus, in four days’ time, three leading banks have launched SME loan offers. Societe Generale Expressbank offers funding at 6.95% interest in euro, secured by the National Guarantee Fund. Approval takes less than 48 hours. Raiffeisenbank’s proposition comes with a fixed interest rate for the first year – 6.8% for loans in euro and 7% for local currency debts. UniCredit Bulbank introduced its bundle Business Leader Import/Export, which provides financial intelligence and tips to exporters, willing to set foot on foreign markets and make investments there. The list of banks with active SME loan offers is long – Fibank, DSK Bank, United Bulgarian Bank (UBB), Cibank, ProCredit Bank, etc.
Source: Dnevnik (21.10.2011)

As many as five Bulgarian banks accounted for two thirds of the overall profit of the country's banking system in the first nine months of 2011, Bulgarian National Bank (BNB) data showed. Bulgarian banks' combined profit stood at 484.5 million leva in January-September, with UniCredit Bulbank, DSK Bank, Raiffeisenbank, Piraeus Bank and Corporate Commercial Bank accounting for 371.6 million leva of the total. A total of nine banks suffered losses in the period. The eight banks that recorded negative results in the second quarter were joined by the domestic branch of Turkey's Isbank, which started operations in the country in the summer. The remaining financial institutions to register losses in the period were Investbank (6.8 million leva), Bulgarian American Credit Bank (16.5 million leva), Regional Investment Bank (349 000 leva), NLB Banka Sofia (3.7 million leva), Ziraat Bank (227 000 leva), Emporiki Bank (5.976 million leva), Teximbank (1.4 million leva) and Alfa Bank, Sofia branch (30.4 million leva). The branch of Greece's Alpha Bank has been reporting losses for several consecutive years. Originally, the negative result was attributed to the bank's robust network expansion and consequently to its foray in the retail banking business and the effects of the financial crisis. Emporiki Bank, part of French banking group Credit Agricole, as well as NLB Banka Sofia and Regional Investment Bank, have also been reporting negative figures since their entry on the Bulgarian market. Investbank, which registered a loss for a third quarter in a row, has managed to keep the result almost unchanged compared to the previous three-month period. BACB, however, saw its net loss widen by about two million leva on 2010. Twelve banks reported a rise in earnings with some of the entities enjoying significant annual growth. MKB Unionbank and ProCredit Bank, for example, boosted their bottom lines by nearly three times to 4.9 million leva and seven million leva, respectively. The profit of Allianz Bank surged more than 10 times in January-September to 9.8 million leva compared to the year-earlier period. Societe Generale Expressbank reported an increase in net profit of almost 90 per cent to 38.6 million leva. The lower income of domestic banks, stemming from tight lending and rising costs for bad loan provisions, are the main reasons behind the low profits or losses of domestic banks. However, the number of banks to record losses has remained relatively stable in the past three years and the banking system as a whole has been profitable.
Source: Darik Radio (03.11.2011)