The fundamentals of the banking sector in Bulgaria are strong, according to Bulbank chief executive officer Levon Hampartzoumian.

Hampartzoumian, who is also chairperson of Bulgaria’s Association of Commercial Banks and chief executive-designate of the forthcoming UniCredit-owned megabank, was speaking on February 13 at the Bulgarian-Greek economic forum at the Sheraton Hotel.

He said that current market trends included a shift to SME and retail.

Return on investments after tax was close to 20 per cent, efficiency measured by cost to income ration was 55 per cent, and non-performing loans were at the “very healthy” level of three per cent relative to total gross loans.

Hampartzoumian said that Bulgaria had one of the most dynamically evolving financial sectors in New Europe.

Financial intermediation was above the New Europe average but was below the average for the European Union. There was still room for expansion in some areas, notably the SME sector. It was strong deposit and lending growth rates that had allowed intermediation levels to exceed those reported in New Europe.

The structure of the market in terms of key players would remain dynamic as consolidation of the pan-European market proceeded, he said.

At the same time, there was strong rivalry for market share.

Hampartzoumian said that he foresaw an improving operating environment, a shift to extended borrowing, lower cost of financing and a very fast increase of indebtedness from a low level.