On the demand side, uncertainty about the future development of the macroeconomic environment, as well as the relatively weak investment activity of firms, are likely to have a limiting effect on credit growth for the private sector.
The BNB cites the results of the Bank Lending Survey for the fourth quarter of 2020, which show tightening the standards for approving loan applications from businesses and households, with the tightening of consumer loans being the most important.
Factors that contributed to the tightening of credit policy during the quarter were the lower propensity of banks to take risk and the increased risk assessment. Banks expect the first quarter of 2021 to tighten standards for corporate lending, especially for small and medium-sized enterprises (SMEs), and to loosen standards for household lending.
Banks’ expectations for the first quarter of 2021 are for a certain increase in the demand for loans from both companies and households, as in the corporate sector the increase is expected to be concentrated in the segment of short-term loans.
iStock
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In the second quarter of 2021 we expect the deposits of the non-governmental sector in the banking system to grow at a rate close to those observed in the first two months of the year and to start following a gradual slowdown from the second half of the year in line with the projected gradual strengthening. economic activity, according to the BNB.
Growth of deposits and loans in April as well
For loans to non-financial corporations and households, a further slowdown in growth can be expected over the next two quarters due to the gradual expiration of the extended moratorium on bank loan payments.
istock
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In realizing the assumption that nThe progress in the coming months in achieving group immunity against COVID-19 due to the increasing number of patients and vaccinated will allow a gradual mitigation of anti-epidemic measures in Bulgaria and in the main trading partners of the country, in the second and third quarters of 2021 we expect more significant increase in real GDP on a chain basis, the analysis says.
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