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Value of bad loans growing but at bay

Fri, Jun 27 2008 15:45 CET

byElena Koinova

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Problematic and bad loans in the banking system totaled 915.9 million leva in what represents 2.17 per cent of all corporate and household debts, data from the Bulgarian National Bank (BNB) as of end-May 2008 revealed, Dnevnik daily reported.

Nonetheless, the ratio of bad loans has shrunk from 2.38 per cent because the total loan portfolio increased by 15 billion leva in the 12 months to end-May 2008. In real terms, though, the size of bad loans rose by 268.5 million leva in what is a 41.5 per cent year-on-year increase.

According to bank experts, the share of bad loans is no reason for concern and there were no fundamental reasons to trigger an avalanche deterioration of the loan portfolio quality. Personal income and the economy were growing, whereas the unemployment rate was on the decline, according to bankers.

Consumer loans proved the most problematic, with the value of bad loans being at 268.3 million leva or four per cent of the total consumer loan portfolio. During the same period a year ago, their share was at 2.23 per cent.

Corporate borrowers were the most diligent payers. Bad loans accounted for 465.5 million leva or 1.8 per cent of all corporate loans. In May 2007, the value of bad loans came in at 2.12 per cent or 351 million leva.

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