2024-06-27 19:59:09
The Governing Council of the BNB set the extent of the countercyclical capital buffer, relevant to credit score threat exposures within the Republic of Bulgaria, at 2 % within the third quarter of 2025, the BNB stories. Thus, the extent of the indicator has been maintained because it got here into impact within the third quarter of 2023.
The evaluation of the extent of the anticyclical buffer takes into consideration each the reference indicator and the related pointers of the European Systemic Danger Board (ESRB) and different indicators that the BNB has deemed appropriate for reflecting cyclical systemic threat. Concerning the information associated to the reference indicator, on the finish of the primary quarter of 2024, the credit score/GDP ratio, calculated based on the methodology revealed on the web site of the Bulgarian Nationwide Financial institution, amounted to 77.9 %. The deviation of the indicator from the long-term development is unfavourable (minus 28 share factors), which corresponds to a zero worth of the reference indicator for the countercyclical buffer.
Since the usual indicator of the deviation of the credit score/GDP ratio from the long-term development doesn’t adequately mirror developments in cyclical dangers, further indicators targeted on the credit score market, indebtedness, actual property market, in addition to and the final state of the financial surroundings.
Credit score exercise within the family sector stays excessive, particularly within the housing loans section, as their elevated provide by credit score establishments creates situations for added credit score demand. Within the quick time period, the rise in credit score volumes has a constructive impact on the profitability of the banking sector, however extended intervals of excessive credit score development create conditions for a possible improve in indebtedness and accumulation of credit score threat in banks’ stability sheets. Beneath hostile developments within the financial surroundings, the flexibility to service obligations could weaken, resulting in a rise in non-performing loans and impairment fees. In reference to this, credit score establishments ought to preserve credit score requirements primarily based on the set decided by the Governing Council of the BNB on Might 20, 2024, in addition to different indicators. As well as, it’s obligatory for credit score establishments to use well timed and sufficient provisioning, primarily based on conservative assumptions that take note of the dangers of hostile developments within the financial surroundings.
In 2021, the Administration Board of the BNB elevated the extent of the countercyclical buffer relevant to home credit score threat exposures to 1 % from October 1, 2022 and to 1.5 % from January 1, 2023, and in September 2022 the extent the countercyclical capital buffer was additional elevated to 2 % efficient October 1, 2023. Given the persistently excessive charges of credit score development and uncertainty within the financial surroundings, the countercyclical capital buffer on the stage of two % within the third quarter of 2025. goals to strengthen the resilience of the banking system underneath strain on profitability and the capital place brought on by a possible improve in non-performing loans and impairments.