Lending will continue to grow quickly this year, but not as fast-paced as in 2007, Roumen Simeonov, deputy governor of the Bulgarian National Bank (BNB), told the Banks, Investments, Money international exhibition in Plovdiv on February 27.

In 2007, the volume of loans rose by 63.7 per cent on the year. Corporate lending, at 71 per cent, outpaced the retail segment, which grew by 52 per cent, he said.

The trend will persist despite the central bank's efforts to check credit growth. This year, BNB plans to tighten its requirements even further and financial institutions will be expected to keep additional capital and liquidity reserves against unforeseen events, as well as to publicly announce information about risks banks undertake.

Simeonov believes the impact of the global financial crisis on Bulgaria will be insignificant because banks in the country focused on conventional banking, rather than investment banking. Their main sources of financing are deposits and funds from parent banks, which makes banks independent from external sources of financing, Simeonov said. Bulgarian banks did not have any direct exposure to complicated financial instruments either.

The main effect from the financial crisis, therefore, would be that banks would most likely review their price-formation policies and, if anything, interest rate margins would undergo a cut.

Simeonov underscored a shift in banks' loan issue preferences last year, switching to expand their corporate lending rather than loans to households.

Figures of the BNB show that corporate loans accounted for a 62.13 per cent share of banks' aggregate loan portfolio. Consumer loans had a 24.74 per cent share, mortgage loans – 12.9 per cent.