Banking System Assets Increase in First Quarter
The assets of the banking system increased by 2.5% (4.3 billion BGN) in the first quarter, reaching 176.3 billion BGN by the end of March. Compared to the end of December 2023, loans, advances, and debt securities also increased. However, the size of the position “money, cash balances at central banks, and other sight deposits” decreased during this period.
These findings are outlined in the quarterly publication “Banks in Bulgaria” by the Bulgarian National Bank. The report, prepared by the Banking Supervision Department, provides a brief analytical overview of the state of the banking system.
Banking Sector Analysis in the First Quarter of the Year
During the first quarter of the year, supervisory regulations and balance sheets, as well as income reports for groups of banks and individual banks in the country, were analyzed. The market share of significant banking institutions (according to ECB criteria) at the end of March accounted for 68.6% of the banking system’s assets, while less significant institutions held 28.9%, and foreign bank branches held 2.5% (compared to 68.8%, 28.8%, and 2.5% at the end of December 2023).
Changes in the structure of banking system balance sheet assets were observed in the first quarter. Firstly, the size of the “cash” position was noted, which played a significant role in the overall balance sheet composition of the banking sector.
Overview of Central Bank Deposits and Other Sight Deposits
The report on central bank deposits and other sight deposits shows a decrease of 5.7 billion BGN, bringing the total to 30.6 billion BGN. This decrease is mainly attributed to the dynamics of central bank deposits, resulting in a decrease in their share of assets from 21.1% at the end of last year to 17.4%.
Growth in Debt Securities
Debt securities saw an increase of 2.4 billion BGN, reaching a total of 28.3 billion BGN. As a result, the portfolio of debt and equity instruments at the end of the period rose to 29 billion BGN, with its share in balance sheet assets reaching 16.4%.
Rise in “Loans and Advances” Position
There has been an increase in the “loans and advances” position, contributing to the overall growth in assets. This increase is essential for maintaining a healthy and diversified portfolio in the financial sector.
Banking Sector in Bulgaria Sees Growth in Assets
In the first quarter of this year, the banking sector in Bulgaria experienced significant growth in assets. The total assets reached 110.9 billion leva, an increase from the previous quarter. The share of assets in the total assets also rose from 60% to 62.9% by the end of the period.
Compared to the end of last year, the size of the banking system’s assets, relative to GDP, increased to 94.5% from 93.7%. The central bank reported that the total amount of gross credits and advances at the end of March was 114.1 billion leva, showing a growth of 7.8 billion leva from the end of December last year.
This increase was mainly driven by higher credit institution receivables, which increased by 5.1 billion leva, accounting for 56.9% of the total increase in assets. Overall, the banking sector in Bulgaria is showing positive signs of growth and stability.
Banking System Credit Portfolio Reaches 100.1 Billion Leva
At the end of March, the gross credit portfolio of the banking system reached 100.1 billion Leva, with an increase of 2.7 billion Leva on a quarterly basis. This growth was driven by an increase in loans to households (1.8 billion Leva, 4.5%) and non-financial corporations (927 million Leva, 1.9%). There was also an increase in loans to other financial corporations (200 million Leva), while loans to the “public administration” sector decreased by 201 million Leva.
During the first quarter, the structure of loans and advances by residency and currency was influenced by the economic situation.
Decrease in Credit and Advances for Residents
The percentage of credits and advances for residents has decreased to 85.4%, while the share for non-residents has increased to 14.6% (compared to 88.4% and 11.6% at the end of December). In the currency structure of credits and advances, the share in Bulgarian lev has decreased from 66.7% to 65.2%, while in euro-denominated ones, it has increased from 29.9% to 31.3%. The share of credits and advances in other currencies at the end of the period was 3.5% (compared to 3.4% at the end of December 2023). Between January and March, deposits in the banking system increased by 2.7 billion lv. to 150 million lv.
Analysis of Financial Deposits in the First Quarter
During the first quarter, there was an increase in financial deposits, mainly due to the rise in household deposits. Household deposits increased by 1.7 billion leva, or 2.1%. Additionally, there was an increase in deposits for credit institutions (1.1 billion leva, 10.5%), the “public administration” sector (415 million leva, 11%), and other financial enterprises (118 million leva, 2.9%). However, non-financial enterprise deposits saw a decrease of 642 million leva, or 1.4%.
There were no significant changes in the structure of deposits by residency and currency during the first quarter. By the end of March, the share of deposits in the country’s total financial market remained stable.
Banking System Report: March 2024
The banking system reported a profit of 818 million BGN by the end of March, which was 50 million BGN (6.5%) higher compared to the first quarter of the previous year. The share of deposits in local currency increased to 61.8%, while deposits in euros rose to 32.1%. Deposits in other currencies accounted for 6.1% of the total.
