Banking System Overview H1'20
PROFITABILITY OF THE SYSTEM DETERIORATES; THE MORATORIUM KEEPS NPE’S UNDER CONTROLPROFITABILITY OF THE SYSTEM DETERIORATES; THE MORATORIUM KEEPS NPE’S UNDER CONTROL
 H1’20 net income of the banking sector was down 43.9% YoY to BGN 515.2m due to lower net interest income, lower F&C income, net FX losses and surge of credit provisions. 12-m trailing ROE of the system shrank to 8.8% vs 11.8% at end-2019.
 The growth of gross loans slowed down to 6.1% YoY (+BGN 3.8bn) as the corporate segment registered only 1.7% YoY growth while retail segment kept its momentum and registered 8.2% YoY growth. Compared to end-2019, gross portfolio size increased by only 1% with corporate portfolio down 0.3% and retail portfolio growing 2.8%.
 The interest rates on the BGN denominated loans (70% of the total new loans) continued to decline in H1’20 while rates on new EUR denominated loans (28% of total new loans) witnessed only minor changes.
 Both 90-days overdue ratio (5.71% of gross loans) and NPE’s ratio (8.98% of gross loans) improved as a result of the moratorium on bank payments. BGN 8.1bn loan portfolio was approved for deferral of payments by the end of June. The rescheduled portfolio accounts for around 13.1% of the eligible gross portfolio. BNB has extended the deadlines for applications until September 30 and more substantial increase of overdue loans could be expected in H1’21.
 The customer deposits continued to grow steadily reaching BGN 93.4bn at end-June, +8% YoY and +1.7% YtD. For H1’20, the growth was mainly due to retail clients.
 From 1 October 2020, Bulgaria will join the Single Resolution Mechanism, following the decision by ECB to establish close cooperation with BNB.
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First Financial Brokerage House (FFBH) is a leading non-banking financial institution on the Bulgarian capital market. Founded in 1991, FFBH offers the complete spectrum of investment banking services spanning corporate finance, privatisation advisory, mergers and acquisitions, financial consulting, brokerage services, research & analysis and asset management.
FFBH provides its services mainly to major international banks and corporations seeking investment in Bulgaria. FFBH is not only local contractor and partner to its clients but also an information source and provider for all major news and events in the economic and political life of the country.
We are the main contact point for the large majority of foreign and local institutional investors in the Bulgarian equity market. FFBH is providing access to the Bulgarian Stock Exchange by either its highly experienced sales trading desk or by order routing across the Bloomberg network.
Additionally, FFBH is offering a range of tools, specifically tailored for the retail investor. Both domestic and international markets are only a click away, via electronic trading solutions. As a major advantage, our customers are able to benefit from the broad range of Analysis & Research products with premium quality, provided by our team of dedicated analysts.
Clients of our research products are most of the largest foreign and local institutional investors looking for opportunities in Bulgaria. More than 100 investment banks, investment funds and other institutional investors use our Equity research and Economic review on a regular basis. FFBH’s Morning Bulletin and Weekly Bulletin reach more than 300 clients over different countries and continents.
Our major Research and Analysis Services include:
- Semi-Annual Outlook of the Bulgarian economy and the domestic capital markets;
- Equity analyses of the biggest and/or most liquid companies listed on Bulgarian Stock Exchange - Sofia;
- Quarterly Bulgarian Real Estate sector and REITs overview;
- Quarterly Bulgarian Banking System overview;
- Quarterly macroeconomic overeview, with details on the major economic sectors, commentaries, and statistical indicators;
- Daily and Weekly bulletins, including an overview of the capital markets and the most important macroeconomic & corporate events.
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