BNB Governor Confident about Bulgarian Economy, Banking System

Bulgarian National Bank Governor Ivan Iskrov has expressed confidence about the stability of Bulgaria's banking system and the prospects for Bulgaria's economy despite the sovereign debt crisis in Greece.

Speaking at a round table taking place on the sidelines of the "Bank of the Year" ceremony, he emphasized that Bulgaria's capital adequacy stood at 15.36%, or three times over the EU minimum requirements.

According to Iskrov, Bulgaria's banking system includes no bad banks, which means that journalists and experts should refrain from speculations involving Greek banks' presence on the domestic bank market even in pre-election times.

The central bank governor pointed out that loan conditions in Bulgaria were improving but that a significant drop in interest rates was unlikely.

Iskrov highlighted the positive features of the Bulgarian economy, among which the 3.4% economic growth for the first quarter of 2011; the fact that export was developing very well, especially in the pharmaceutical sector, the production of electric machines and appliances, etc; a current account deficit downsized to 0.6% from 25.2% in 2008; a positive growth in foreign direct investments in Q1 2011, reversing a downward trend since the onset of the crisis.

Although non-preforming loans are still on the rise, he said, the Bulgarian banking system had enough provisions to weather it.

He assured that Bulgarian banks have built adequate buffers of capital to protect the system.

In his words, the growth in non-performing loans has slowed down to 8.5% from 21.7% in 2010.

At the same time, Iskrov remarked, bank deposits are going up, which indicated confidence in Bulgaria's banking system.

The central bank governor reminded that stress tests are underway at 91 leading banks in the EU to see if they meet the prescribed 5% capital adequacy of primary capital.