Our banks are sufficiently capitalized

Non-performing bank loans will amount to around 6 percent at the end of 2009, but banks are adequately capitalized to deal with it, says National Bank governor Ivan Iskrov. This position he expressed to journalists asked to make an overview of the activity and condition of the banking system for 2009-a. The year was good for the banking system, said Iskrov. Whether the system is good, is valued at several key indicators – profit status of credit portfolios, capital and liquidity adekvatost. Although in 2009 we have increased non-performing loans outstanding, which is normal in difficult economic situation, the Bulgarian banking system due to the tight regulation very solid build buffers to meet these challenges, said Iskrov. He said that overdue loans increased from 2.4% to about 6 per cent. Iskrov said that this had increased interest rates on loans, but not all increases in interest rates on deposits have been transferred and the interest on loans. The expected profit of the banking sector in 2009 is 700 million, which equals half of last year’s profit of banks in Bulgaria. Fully covered financially overdue bank loans, said Iskrov. From current year profits next year will be re-capitalized and will increase the capital buffer against problematic bank claims to about 3,5 billion euro. Liquidity of the system is in the range of about 20 percent, said Iskrov. Bank did not allow to be paid a dividend to shareholders in early and mid 2009, he added. Capital adequacy of the banking system increased by about 14% at the end of 2008 to around 17 percent at the end of the year. Let’s be realistic and know that as companies and banks operating in difficult conditions, „said Iskrov the possibility of reducing interest rates. In response to a question when it will be submitted application documents in the intermediate exchange rate mechanism ERNs 2, Iskrov said that the Bank is not committed to specific deadlines, but working hard in line with the government. He pointed out that our country will be the few countries in the EU who will finish 2009 with a small budget deficit. Greece, which is a member of the EU ending 2009 with a deficit of about 12.5 percent and its credit risk is assessed as a higher rate by about half in comparison with Bulgarian. Let everyone be concerned with what means, said Iskrov in response to the question of how to evaluate a proposal from the Bulgarian Industrial Association to further reduce the reserve requirement / MZR / in commercial banks. According Iskrov this is pointless because MZR only affects short-term interest rates on the interbank market, which are now low enough.

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Finance

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