Bulgarian Banks Meet Regulatory Requirements, Show Strong Liquidity

The Bulgarian National Bank (BNB) has announced that the country’s banking system has met all regulatory requirements as of September 30th. This is a significant achievement, showcasing the strength and stability of the Bulgarian banking sector.

Liquidity Coverage Ratio (LCR)

The LCR is a key indicator of a bank’s ability to meet its short-term financial obligations without incurring excessive risks. As of September 30th, Bulgaria’s liquidity coverage ratio stood at an impressive 281.9%, significantly above the minimum required level of 100%.

Liquidity Buffer Growth

The liquidity buffer increased by BGN 1.3 billion (3.8%) to BGN 36.3 billion during the third quarter of 2021, driven primarily by:

• Reserves in the central bank with an option for withdrawal increasing by BGN 1.1 billion (6.4%)
• Assets in the central government falling by BGN 326 million (2.2%)
• Coins and banknotes increasing by BGN 260 million (12.2%)
• Assets with the central bank rising by BGN 81 million (25.6%)

Liquidity Composition

The total share of the three most liquid items - coins and banknotes, reserves in the central bank with an option for withdrawal, and assets with the central bank - rose to 57.3% as of September 30th.

Net Liquidity Outflows

Net liquidity outflows increased by BGN 42 million (0.3%) to BGN 12.9 billion during the period under review.

Loans-to-Deposits Ratio

The banking system’s loans-to-deposits ratio remained close to that of June 30th, at 68.1%.

Net Stable Funding Ratio (NSFR)

All Bulgarian banks comply with the net stable funding ratio (NSFR) requirement of 100%, which was introduced as part of the Basel III framework on June 28, 2021. The aggregate value of the NSFR for the banking system was 163.0% as of September 30th.

Conclusion

Overall, the data suggests that Bulgarian banks are in a strong position to meet their short-term financial obligations and maintain stability in the market.