Bulgaria’s 10 largest commercial banks generated 85 per cent of the sector’s overall profit of 342 million leva in the first six months of 2006.
The top three alone contributed 45 per cent to the sector’s overall profit.
The two newcomers in the top 10 profit-makers in comparison with June 2005 are Hebros Bank and Economic and Investment Bank (EIBank). First Investment Bank and Unionbank dropped out while three other banks drop by one or more positions compared to the first half of 2005.
DSK Bank was the top performer in January-June 2006 with 65 million leva but its growth rate of 13 per cent was slower than the sector average of 23.2 per cent. DSK Bank made a profit of 1.29 leva on 100 leva of assets against 2.47 leva for Raiffeisen Bank Bulgaria and 1.49 leva for United Bulgarian Bank (UBB). DSK Bank reported a net interest income growth of 7.9 per cent for the past 12 months.
UBB reported a profit of 51 million leva to place second in the first half of 2006. The bank’s net interest income added 12.2 per cent.
The 33 million leva profit posted by Raiffeisen Bank Bulgaria was good enough for the third spot in the semi-annual ranking. The net interest income of the bank jumped 63 per cent year-on-year.
The H1 profit at HVB Bank Biochim rose 47 per cent year-on-year to 27.4 million leva, the sector’s fourth best performance.
The top 10 comprises also of SG Expressbank, EIBank, Hebros Bank, Bulbank, Postbank and Bulgarian American Credit Bank.
Municipal Bank reported a 66 per cent drop in profits to one million leva.
ProCredit Bank was another profit slider, down 42.5 per cent on the same six-month period of 2005.
Emporiki Bank and Texim Bank were the only lenders to finish the first half of 2006in the red. Emporiki booked a loss of 2.7 million leva against a loss of 774 000 leva a year ago.
Texim managed to slightly narrow its loss to 284 000 leva against 363 000 leva a year ago.
Meanwhile, most of the business in the mortgage lending segment of Bulgaria’s banking system is in the hands of the top players, it emerges from the latest data released by Bulgarian National Bank (BNB).
The largest competitors control 92 per cent of the 2.58 billion leva mortgage loan total.
Domestic mortgage lending rose by one billion leva or 70 per cent in the past 12 months.
Although it has seen its market share narrowed from 34 per cent a year ago to 28.8 per cent, DSK Bank still tops the rankings ahead of United Bulgarian Bank and Bulbank.
Similarly, UBB and Biochim also lost ground versus mid-2005.
The top three owned 65 per cent of the mortgage portfolio a year ago, a share that has dropped to 59 per cent.
The biggest gainer is Piraeus Bank which breaks into the top 10 at the number eight spot.
Bulbank, Postbank, Raiffeisen Bank Bulgaria, DZI Bank and Allianz Bulgaria all posted a year-on-year increase in market share.
In the beginning of August, the central bank relaxed its restrictions on the growth in lending by commercial banks.
The measure, which was recommended by the International Monetary Fund (IMF), needs to be gradually lifted as the country prepares to join the European Union.
The change effectively scraps the progressive increase in additional mandatory reserves, which Bulgarian banks now have to deposit with BNB on a quarterly basis if their loan portfolios increase faster than the growth rate permitted by the central bank.
The lending growth ceilings were imposed in the first quarter of this year and vary from five to seven percent.
BNB has imposed various restrictions on the growth of bank lending since 2004 on the advice of the IMF, which has blamed the rise in lending for the surge in Bulgaria’s current account deficit. Despite the restrictions, the country’s current account gap rose to 11.8 per cent of gross domestic product (GDP) last year from 5.8 per cent of GDP in 2004.
