Industry Forecast - Buoyant Economic Activity To Drive Loan Growth - 18 DEC 2017

BMI View: We forecast Bulgarian loan growth to remain on an upward trajectory, as household and non-financial corporate borrowing demand continues to increase in line with the country ' s robust economic expansion. Additionally, strong banking sector liquidity and improved asset quality will enable banks to ease credit conditions, which will further supports credit growth over the next two years.

Bulgaria's robust economic expansion will support growth in the country's commercial banking sector over the next two years. Real GDP growth will come in at an estimated 3.8% in 2017, and will remain on a healthy growth trajectory in the years ahead (see ' Economic Growth To Remain Broad-based ', October 31). Growth will be broad-based, with strong fixed investment supporting loan demand among non-financial corporates (NFCs), whilst a tight labour market will fuel household demand for credit. From the supply side, asset quality and capital adequacy continue to improve, allowing banks to ease credit conditions. As such, we forecast client loan growth to accelerate from an estimated 4.5% in 2017 to 5.5% and 6.0% in 2018 and 2019, respectively.

Broad-based Loan Growth Ahead

Nearing Pre-Crisis Levels
Bulgaria - Client Loans, % chg y-o-y
Source: BNB, BMI

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