Bulgarian Banking System Stays Strong, Capital Coverage Remains High

Overview

The Bulgarian banking system has continued to demonstrate a strong capital base, with the leverage ratio reaching 10.50% as of December 31st, according to data released by the Bulgarian National Bank (BNB).

Leverage Ratio and Capital Coverage

The BNB reported that the leverage ratio, which measures a bank’s ability to withstand potential losses, has remained stable over the fourth quarter of 2021. The figure is significantly above the minimum required level of 3.0%, indicating a high capital coverage of total exposure.

• Leverage ratio: 10.50% (December 31st)
• Total excess capital: BGN 4.8 billion, up by BGN 124 million (2.6%) compared to the previous quarter

Liquidity and Loans-to-Deposits Ratio

The banking system’s liquidity coverage ratio remained significantly above the minimum required level of 100%, reaching 274.1% as of December 31st. The liquidity buffer increased by BGN 5.2 billion (14.4%) to BGN 41.5 billion in the fourth quarter, driven mainly by increased reserves at the central bank.

• Loans-to-deposits ratio: 69.4% (December 31st), up from 68.1% at the end of September
• Credit portfolio growth accelerated to 3.0% in the fourth quarter, outpacing deposit growth

Net Stable Funding Ratio

The aggregate net stable funding ratio for the banking system reached 166.0% as of December 31st, exceeding the minimum regulatory requirement of 100%. All banks in Bulgaria met the minimum requirement.

• Net stable funding ratio: 166.0% (December 31st)

Analyst Insights

The strong performance of the Bulgarian banking system is a testament to the country’s economic resilience and the BNB’s effective regulation and supervision, according to analysts.

Source

Bulgarian National Bank (BNB)