A series of Bulgarian banks have reported their individual results for 2006 in recent days, against a background of Bulgarian National Bank statistics showing an overall increase of profits of commercial banks last year.

Postbank, which is majority owned by EFG Eurobank Ergasias of Greece, announced on February 2 that its 2006 preliminary net profit figure was 43.2 million leva. This was 1.5 times higher than the previous year, while the bank’s credit portfolio increased by 34.7 per cent.

Postbank currently is the seventh-largest bank by assets in Bulgaria. EFG Eurobank, which bought Bulgaria’s DZI Bank in 2006, plans to merge Postbank and DZI to create the fourth largest bank by assets in Bulgaria.

On January 29, DZI Bank reported a 71.4 per cent drop in net profit in 2006 to 1.728 million leva although net interest income rose by a third.

On February 1, Raiffeisenbank Bulgaria, a unit of Austrian banking group Raiffeisen Zentralbank Oesterreich (RZB), announced that its preliminary 2006 net profit had increased by 51.8 per cent over the 2005 figure to 67.6 million leva.

In a statement, Raiffeisenbank Bulgaria said that most of the bank’s loans, 48 per cent, had been to small and medium enterprises (SMEs) while 25 per cent were to retail clients.

Raiffeisenbank Bulgaria was the fourth-largest bank by assets in Bulgaria at the end of 2006.

On January 31, commercial bank MKB Unionbank, majority-owned by Hungarian MKB Bank, reported a 74 per cent drop in 2006 net profit to 3.438 million leva, while its net interest income fell slightly.

MKB Bank, a subsidiary of Germany’s Bayerische Landesbank (BayernLB), finalised the purchase of 60 per cent of Unionbank in May last year, saying at the time that it aimed to make Unionbank one of the biggest banks in Bulgaria.  At the end of 2006, MKB Unionbank ranked the 18th largest bank by assets in Bulgaria.

The net profit of EIBank (Economic and Investment Bank) for 2006 was 29.978 million leva, nearly four million less than in 2005.

In a report on February 1, Bulgarian newspaper Dnevnik said that the assets managed by the Bulgarian banking industry increased by 10 billion leva to 42 billion leva in 2006, according to central bank data.

The growth rate of 30 per cent was slower than that achieved in the previous year but was on the back of a much higher base.

The main force behind the asset growth was the increase in deposits which added eight billion leva to 33 billion leva, including 30 billion leva in retail and corporate deposits. Credits grew 24 per cent to 23 billion leva.

Mortgage loans posted the fastest annual growth rate at 75 per cent, adding 1.5 billion leva to the banks’ portfolios.

The brisk lending operations of the banks boosted the sector’s overall profit to 800 million leva in 2006 while improving profitability indicators. Return on equity topped 20 per cent, adding a percentage point over 2005. Return on assets was recorded at 2.1 per cent or slightly higher than the 2005 level.

Wire agency SeeNews reported that the aggregated net profit of the commercial bank system increased by 38.2 per cent year-on-year to 807.6 million leva in 2006, according to central bank data.

The bank penetration ratios retained a fast pace of expansion, as the total value of assets managed by the 32 players in the sector advanced by 28.4 per cent in a year to 42.2 billion leva or 92.5 per cent of the projected full-year GDP.

The stock of bank credits, net of specific reserves, went up by 24.6 per cent to 22.1 billion leva or 48.5 per cent of GDP.

SeeNews said that although the bank penetration rates were comparable to the new EU member states, they were expected to grow steadily in medium terms due to relatively low non-bank financial intermediation, large net inflows of foreign investments, and further improvement to the standards of the more mature EU economies.