site.btaBanks Book BGN 3.7 Bln Profit on Lending Surge

The banking system posted a profit of BGN 3.7 billion as of December 31, 2024, up by BGN 277 million (8.1%) compared to 2023, the quarterly Banks in Bulgaria report said on Friday.

The publication, prepared by the Banking Supervision Department of the Bulgarian National Bank (BNB), is available on BNB's website.

Net operating income rose by BGN 962 million (13.9%) to BGN 7.9 billion, driven mainly by higher net interest income, which accounted for 70.7% of the total. Income from financial instruments and from fees and commissions also grew, while other net income declined.

Net interest income totalled BGN 5.6 billion, an annual increase of BGN 723 million (14.9%). Interest income reached BGN 6.7 billion, up BGN 851 million (14.5%), while interest expenses rose by BGN 128 million (12.4%) to BGN 1.2 billion.

Income from fees and commissions increased by BGN 132 million (8.9%) to BGN 1.6 billion, with a 20.6% share of net operating income. Financial instruments brought in BGN 248 million, up from BGN 29 million, raising their share from 0.4% to 3.2%. Other net income fell by BGN 112 million (20.3%) to BGN 439 million, with a 5.6% share, down from 8%.

Administrative expenses grew by BGN 268 million (12.2%) to BGN 2.5 billion.

In Q4 2024, banking system assets rose by 5% (BGN 9.2 billion) to BGN 191.6 billion.

Gross loans and advances increased by BGN 4.3 billion (3.7%) from the end of Q3 to BGN 120.6 billion. Claims on credit institutions rose by BGN 377 million (3.9%) to BGN 10 billion. The gross loan portfolio expanded by BGN 4 billion (3.8%) to BGN 110.6 billion, driven by growth in loans to households (up 4.6% or BGN 2.1 billion, including BGN 1.7 billion in mortgage loans) and to non-financial corporations (up BGN 1.8 billion, 3.5%). Loans to other financial corporations increased by BGN 267 million (3.1%), while lending to the State government sector declined by BGN 99 million (10.5%).

Deposits rose by BGN 7.9 billion (5.1%) in Q4 to BGN 162.9 billion. Growth was recorded in deposits from households (up BGN 4.3 billion, 4.9%), credit institutions (up BGN 2.4 billion, 20.9%), non-financial corporations (up BGN 1.3 billion, 2.8%) and other financial corporations (up BGN 492 million, 13%). Deposits from the State government sector dropped by BGN 640 million (17%).

The report notes that the banking sector continued to operate in an environment of heightened geopolitical uncertainty, which, along with potential changes in national policies, could impact macro-financial conditions.

Domestically, conditions remained relatively favourable, underpinned by strong private consumption supported by high labour demand, rising employment, and higher real disposable income. Credit activity remained robust, driven by both demand and supply. Low interest rates and strong consumption supported demand, while ample liquidity and a stable capital position enabled supply.