Growing profits, high capital buffers and stable funding are pillars that will continue to support the prospects for banks in Bulgaria, according to Moody's Investors Service's analysis of the banking sector and financial stability in the country reports Investor.
The rating agency marks an improvement in Bulgaria's stability but at the same time draws attention to assets where it believes the risk is still significant.
"The profitability of Bulgarian banks is rising from a low base and we expect revenue growth to continue, albeit at a slower pace," commented Konstantinos Kypreos, Senior Vice President at Moody's Investors Service. "Growth in business opportunities along with rise in lending will support both interest and non-interest income," he added.
The net profit in the banking sector in Bulgaria increased by 41% in 2016, reaching 1.3 billion leva, which is the equivalent of return on invested capital of 10.4%. Positive factors are also the lower provisions for credit losses as well as the reduction of costs.