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Non-performing fast loans rise for the first time in two years

Необслужваните бързи кредити нарастват за първи път от 2 години

For the first time in two years, non-performing quick loans (NPLs) granted by non-bank financial institutions have risen quarter-on-quarter, both in absolute terms and as a percentage of the sector’s total loan portfolio, according to the latest data from the Bulgarian National Bank for the second quarter of the year.

In April–June, the value of NPLs in the sector reached nearly ЕUR 282 million, up by over 7% compared with the previous quarter and around 4.7 per cent more than in the same period last year.

NPL share of the total loan portfolio, albeit minimally, also rose over the quarter – from 6.47% to 6.6 per cent (see chart). Over the past two years, the trend in the second quarter of the year has been the opposite – the value of overdue loans has fallen both in absolute terms and as a proportion of the total portfolio. Whether this marks a reversal of the trend and serves as a leading indicator of challenges in the economic environment will become clear from the sector’s performance over the upcoming months.

View Non-performing quick loans have risen for the first time in two years on Beautiful.ai

Regardless of the year-on-year growth in non-performing loans, the growth in new fast loans granted during the period continues to outpace it – by a factor of two and a half as of June; and at the end of the first half of the year, the total loan portfolio of companies in the market reached a new record – EUR 4.27 billion, representing a 5.2% increase on the quarter and over 18 per cent on the year. In March, non-bank lending exceeded the €4 billion mark for the first time, and the pace of growth has accelerated over the last three months.

Alongside the credit portfolio’s outpacing growth rate on an annual basis, the current share of non-performing quick loans – at under 7 per cent – is a far cry from the sector’s highest levels, recorded in the years following the global financial and economic crisis of 2009. At that time, the sector was also grappling with NPLs amounting to over 30 per cent of the total portfolio. One of the main reasons for the low level of overdue loans in recent years is that companies in the sector have started selling their non-performing loans to specialized debt purchasing companies much more frequently and at a much earlier stage.

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