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Fast NPL rise again amid a slight lending increase in the sector

Пари

Non-performing fast loans (NPL) increased in absolute value and as a share for the first quarter of the year. At that time it was a weak growth in the total loan portfolio, according to BNB data. In previous quarters increased lending helped keep the NPL ratio to total loans largely flat or slightly down. At the end of March the situation is different.

As an absolute value NPL in specialized lending companies grew by nearly 16% for the quarter and by 31.5% for the year.

In the first quarter of this year the NPL share was 7.4% of non-banking loans, the highest level since September 2022. At the same time, for the first quarter, total loans rose by less than 3%, compared to December. On an annual basis the portfolios increased by 22.4%. The year-on-year comparison is more relevant, as the festive month of December usually faster loans were taken out and there is a stronger interest in purchasing goods on installments.

 

According to experts and managers of the sector, the main reason for the growth is inflation, which is even higher for goods bought with fast loans, for example, equipment. This leads to an increase in loan principals, without the number of customers and granted loans having changed significantly.

In terms of maturity data shows a decline in the demand for short-term non-banking loans – those up to 1 year. The growth was mainly generated by loans over 5 years and less than those with a maturity between 1 and 5 years. Long-term loans account for almost half of the granted loans, as an explanation can also be sought in the growing mortgage lending. Some large banks have separated their consumer lending into non-banking companies. So, when supplementing a mortgage loan with a consumer loan, the last one is noted in the statistics for non-bank financial institutions. This sector also includes companies specializing in business lending.

According to BNB data at the end of March the loans, granted to the real economy, exceeded BGN 1.5 billion (EUR 767 million) – 28% growth for the year. For comparison, the most popular consumer loans for households grew by 20% compared to March last year. As of the end of March, there are practically no more non-bank mortgage loans – before that they were very few of all granted.

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