Rising interest rates helped the profit of the Bulgarian banking system increase 48.6 per cent year-on-year to 728.6 million leva in the first half of 2008, data from the central bank released on July 31 shows.

The main local impact from the global credit crunch was the increased cost of external lending resources.

Interest income is up 47.4 per cent, the central bank said.

The domestic banking assets rose 11 per cent over March 2008, to 65.7 billion leva.

Bulgarian National Bank reported a 12 per cent quarter-on-quarter increase to 52.5 billion leva in loans and advances and an 11 per cent increase in deposits.

In Q2, local banks lent 5.7 billion leva and added 5.9 billion leva to their deposit base. Deposits are almost equally split between the retail and corporate sector with roughly 20 billion leva each.

The nation's five largest banks accounted for 62 per cent of the credit volume increase in Q2.

Loans were reported at 78.3 per cent of the banks' balance sheet assets by the end of June, marginally higher than 76.96 per cent in March this year.

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