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Non-performing leasing receivables drop to 15-years low

Non-performing leasing receivables in Bulgaria fell to their lowest level for the last 15 years, according to Bulgarian National Bank’s data. By the end of 2023 they are only 1.6% of the sector’s finance lease portfolio, 0.1 percentage point below the level at the end of 2008.

Historically their lowest level was in the third quarter of 2008 – just under 1 percent. In the second half of 2007 and throughout 2008, unserviced liabilities under financial leases in Bulgaria were below 2% of the portfolios. Such a low share of non-performing debt in the sector  was observed again only in the middle of last year, although in certain quarters it fell to 2% (see the chart). The lower share in the last quarter of 2023 is due to both a decline in “bad” receivables in absolute value and a growth in the total portfolio in line with new business.

As of December 2023 the total value of the financial lease reached nearly BGN 5.77 billion (EUR 2.95 bln), which is an absolute record. For the first time it exceeded the limit of BGN 5 billion last year.

 

View EN_BNB_Leasing_XII.2023 on Beautiful.ai

 

If we add the operating leasing, the credit portfolio of the sector reaches BGN 6.1 billion (EUR 3.12 bln), also a historical record. Operating leasing is a very small part compared to financial leasing – only 5-6% of the entire leasing market in Bulgaria, with a tendency to decrease both in terms of share and value.

Most of the leasing contracts are concluded for a period between 1 and 5 years, according to BNB data. There is also interest in longer-term contracts, and the least are those with a maturity of up to 1 year.

Almost half (47%) of the financial leasing has been used for car purchase, and 25% is for light and heavy trucks. Another 24.5% goes to the purchase of machinery and equipment, and a small part is for computers and electronic equipment, as well as real estate.

The leasing market in Bulgaria is dominated by several large players, most of them are part of large financial groups that also develop other operations. Currently, there are a total of 47 companies in the sector, and their total profit exceeds BGN 109 million (EUR 55.73 mln), 14% more compared to 2022.

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