The Bulgarian banking sector is experiencing pressure on the quality of its assets and profitability, though in 2013 it still generated sound results, Raiffeisen Research said on Thursday.
Profitability was positively influenced by an increased net income from fees and commissions and lower impairment costs, while the system-wide non-performing loans ratio increased slowly to 16.9% compared to 16.6% in 2012, Raiffeisen Research said in its CEE Banking Sector Report.
The net profit of the Bulgarian banking sector showed moderate growth, reaching 300 million euro ($410.1 million) in 2013, compared to 290 million euro in 2012.
Total assets of the Bulgarian banking system increased by 4.0% on the year to 44 billion euro in 2013 thanks to a stable inflow of funds, mainly from private households, Raiffeisen Research noted.
A moderate increase in demand for loans by corporate clients, mostly in agriculture, transport, and processing industries, resulted in a 1.4% yearly growth of the banks corporate loan portfolio to 20 billion euro while retail loans rose by less than 0.5% to 9.5 billion euro.
Retail deposits surged by 9.4% on the year while corporate deposits rose by 7.5%, indicating improving confidence in the Bulgarian banking sector.
The total number of banks operating in Bulgaria fell to 30 after the close-down of the Sofia branch of the Latvian Regional Investment Bank. The market share of local banks grew to 30% in 2013 from 26% a year earlier, largely because of First Investment Bank's acquisition of MKB Unionbank.