Loans to households and businesses in Europe increased by 5.5% in the second quarter of the year compared to the end of 2023, which in absolute value is close to EUR 200 billion, according to a study by the European Banking Authority (EBA) among 162 banks that make up 80% of the sector.
The share of non-performing loans (NPL) in the total portfolio as a whole remains at a stable level – 1.9%, unchanged compared to December and with only 0.01 percentage point above the level of June 2023. There are significant differences by segment – corporate loans and especially those for real estate are more risky, with a higher proportion of unserved than those for households.
NPL in Bulgaria are at a similar level – 2% at the end of June, with a slight increase compared to December, but they are less compared to June last year. Regarding arrears in individual segments, the country is no exception to Europe – households perform better than companies. Compared to June and December last year, there was an increase in the investment properties segment and those for small and medium-sized companies. These are also the segments in which the share of overdue loans is the largest – well above the market average (see the chart). In total the share of corporate overdue loans remained almost unchanged at the end of the second quarter.
In households’ segments consumer and mortgage loans have a much smaller NPL share, and in the last year it has fallen even more. This precedes the new measures of the BNB, which came into force on October 1st and are aimed at calming down mortgage lending and reducing risks in the system. Restrictions on the percentage of collateral on acquired properties, borrowers’ incomes and repayment terms are expected to have an effect on the market, mainly on people with lower incomes and less savings.
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