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Non-performing quick loans grew by nearly 20% in a year, without change in their share

Non-performing quick loans granted by specialized financial companies increased by almost 20% year-on-year to nearly BGN 363 million (EUR 185.6 mln) – the highest growth rate since September 2022 (see the chart), according to Bulgaria National Bank’s data as of December 2023. 

At the same time their share in the total credit portfolio remained unchanged for the fifth consecutive quarter – only 7%, which is the lowest level since the data for this type of loans were published. The main reason – strong growth of this type of lending. At the end of last year quick loans grew by 25% on an annual basis, with their value exceeding a record of BGN 5.5 billion (EUR 2.8 mln). 

 

View ENG_BNB_NPLs in non-banking sector_XII.2023 on Beautiful.ai

Almost half have more than 5 years maturity, but there is also growth in short-term loans. The granted loans are mainly consumer for households, but there is also an increase in those for companies, as well as mortgage loans. However, mortgage loans are a very small part of the non-banking companies’ portfolios, and their share in general is decreasing progressively.

Consumer loans for households are several types, but the BNB’s statistics do not take into account separately. One type is classic quick loans – money, granted by specialized non-banking companies. They are often granted to people who, for one reason or another, do not have access to bank loans or are in urgent need of money.

 Another type of loans are closer to bank credits and are granted by specialized subsidiaries of banking groups for consumer lending. These loans have a lower cost than classic quick loans and usually follow the interest indexes trend, instead of a fixed rate.

The third type are so-called commodity credits, with which various consumer goods are purchased by installments – technique, etc. As an interest rate, they are between the two previous types, and often merchants offer them at a minimal interest rate in an attempt to win over customers. Unlike bank loans, quick loans are not particularly affected by changes in interest rates.

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