Non-performing fast loans have increased significantly

CalculationsOverdue loans in the non-banking sector have increased significantly at the end of September 2021, shows the latest data from Bulgarian National Bank (BNB). Compared to the same period of 2020, their growth is more than one-quarter. The increase would be even bigger if we count the non-performing loans (NPL), sold in the third quarter. 

The non-banking company for fast loans became more popular in the period of COVID-19 pandemic. Their portfolio has grown to nearly 3.5 billion Bulgarian leva (EUR 1.79 bln), almost half a billion leva up, compared to September 2020. In the third quarter the increase was by BGN 141.5 mln.  

At the same time NPL reached 8.1%, compared to 7.4% in September 2020. As an absolute value the increase is by BGN 58.6 mln. Compared to June 2021, the portfolio of overdue loans has decreased (see the chart). The main reason for the decrease is the sale of NPL to the companies, specializing in debt management and collection. In the third quarter, from July to September, NPL sold was BGN 22.4 mln.  

If we go back and compare September 2021 to March 2020, the last month before COVID-19 pandemic, NPL grew by 50%. 

In parallel with the business growth, profit in the non-banking sector also increased – 34% for a year, to BGN 372.2 mln. 

Nearly 43% of all loans have more than 5-years maturity, but their share in portfolios is declining, although in absolute value they’re increasing. The biggest increase is in the short-term loans – with less than 1-year maturity. They grew with 39.2% compared to September 2020, so their share is already exceeding a quarter of a total company portfolio. Most active in non-banking loans are households, but in the pandemic-period the business also increased its attention to them. For households the annual growth is 13%, while businesses have drawn 32% more non-banking loans.  

The consumer credits continue to occupy the most significant share of companies’ portfolio, even with a small increase compared to September 2020. Now they are 95.2% of total non-banking loans, by 0.5 percentage points above the level of September 2020. The mortgage has decreased from 1.5% to 1.3%. 

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