The profit of the thirty odd commercial banks operating in Bulgaria amounted to nearly EUR 450 million in 2015. In the first four months of 2016 only, they registered a profit to the tune of EUR 200 million. In other words, their annual returns may increase by 50% as compared to the previous year.

Is this news good for Bulgaria and its citizens, or the bankers are merely becoming wealthier and continue living in luxury? It is difficult to tell and depends on the point of view. The regular borrowers do not have any good reason to be happy, because they have to fulfill a series of requirements, in order to receive a loan. This is so, because the banks have not alleviated their requirements towards the local borrowers. On the other hand, those who decide to save money in banks are probably disappointed with the record low interest rates on deposits, which are very close to 0%. The bankers are definitely happy with the current situation, because there is no turbulence on the financial markets, their financial indicators are on a positive territory and their treasuries have been gradually filling with money from interest rates, deposits in foreign shares and from higher bank transaction taxes. Meanwhile, their current expenses have been decreasing. In other words, the situation in Bulgaria’s banking sector is very optimistic at present and the five biggest banks have continued to make highest revenues.

Even the quality asset review, which is to start in two months only, is not likely to scare the local bankers who continue registering record high profits. The financiers have already made a lot of changes, in order to boost the quality of their credits and reduce the level of bad loans. Of course, they have to spend some of their record high profits on annual installments at the Deposit Insurance Fund and the Bank Restructuring Fund, which, however, would not change dramatically the current financial situation. Therefore, 2016 may become the most successful year for the Bulgarian banks ever.

English version: Kostadin Atanasov