Dec. 6 (Bloomberg) -- Bulgaria’s banks are well capitalized and have set aside enough provisions to cover increasing bad loans, central bank Governor Ivan Iskrov said today.
Loans more than 90 days past due rose to 11.24 percent of total lending in October from 10.61 percent at the end of September, Iskrov said in a speech in Sofia. The capital adequacy ratio of the nation’s banking system was 17.8 percent at the end of the third quarter.
“The crisis in 2010 didn’t affect the competitiveness of Bulgarian banks,” Iskrov said. “Bulgarian banks were predictable through the crisis period of 2009, 2010 and even had a small profit.”
Bulgarian banks have set aside 4.5 billion lev ($3.3 billion) to cover bad loans, Iskrov said. The nation’s banking system has a total liquidity ratio of 22 percent, he said.
“The Bulgarian banking system is one of the strictest and most conservatively regulated in the” European Union, he said. “The central bank’s supervision policy does not create regulatory comfort.”
Lenders based in other EU countries control 85 percent of banking assets in the Balkan nation. The five biggest banks are UniCredit Bulbank; DSK Bank, a unit of OTP Bank Nyrt., Hungary’s largest bank; United Bulgarian Bank, owned by National Bank of Greece SA; Raiffeisenbank Bulgaria and Eurobank EFG Bulgaria.
“None of the dark scenarios and doomsday forecasts made by Western analysts about Bulgaria took place, regardless of whether the projections were related to the global financial crisis or the Greek debt crisis,” Iskrov said.
Bulgaria’s economy expanded 0.3 percent in the third quarter from the second quarter, after shrinking 5.1 percent in 2009, when the global crisis cut investment and demand.
The government expects the economy to grow 3.6 percent next year. The International Monetary Fund’s estimate is 2.5 percent, and Royal Bank of Scotland Plc forecasts 1.5 percent to 2 percent growth.
To contact the reporter on this story: Elizabeth Konstantinova in Sofia at email@example.com
To contact the editor responsible for this story: James Gomez at firstname.lastname@example.org