Non-performing loans, with delays in servicing of more than six months, reached almost four billion leva at end-September, data of the Bulgarian National Bank (BNB) showed. Bulgarian banks wrote off 816 million leva in loans in the third quarter, reaching 3.884 billion leva, the highest quarterly increase since the start of the credit crunch.

Bankers speaking on condition of anonymity said that the rise in bad loans was fuelled by corporate loans, with large loans restructured several times being written off because further refinancing were exhausted.

Since the financial crisis broke out, the sector has witnessed several waves of loan renegotiation and restructuring, each with a time horizon of between six months and one year, the period within which it was assumed that the loan could be redeemed.

Extensions were granted in line with expectations for the recovery of the Bulgarian economy, but that has proven slow. Bulgaria is seen as the only European country still stuck in the crisis, one banker said.

"
It is obvious that the process of economic recovery is lagging, although we all hoped that the period for loan restructuring will be sufficient for companies to start repaying their obligations more easily,"
said Assen Yagodin, executive director of Postbank.

Meanwhile, non-performing loans with repayments more than 90 days behind schedule, which include delays of more than 180 days, came in at 5.4 billion leva at end-September, accounting for 10.61 per cent of gross loans (excluding loans to financial institutions).

Source: Dnevnik

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Becoming a very dangerous situation