Bulgarian banks continued to boost loan portfolios, though at a slower pace, a survey of the Agency for Economic Analysis and Forecast at the Bulgarian Finance Ministry, carried out among Bulgaria’s commercial banks, showed on May 6.

Banks’ intensive loan activity is mainly driven by available liquidity in the banking system, the desire to retain market share and the favourable macroeconomic environment, according to the report.

The policies of the Bulgarian National Bank (BNB) aimed at slowing down credit growth were no longer a decisive factor for the bulk of commercial banks, according to the report. This is largely due to the lack of signs that the central bank would resort to the introduction of new restrictions.

Demand for loans in the first quarter of 2008 was generated by the same factors as a year ago. Namely, 90.9 per cent of all banks point to operating funds as the main reason for the search of bank loans.

Furthermore, the minimum mandatory reserves and the more expensive financing on international financial markets has encouraged banks to start attracting resources through deposits.

According to commercial banks, euro-denominated loans and deposits in the household segment will grow at a faster pace compared to expectations. In the meantime, the competition that banks experience from non-banking institutions, leasing companies excluded, would decrease.