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Monday 08:30 - 17:30 Tuesday 08:30 - 17:30 Wednesday 08:30 - 17:30 Thursday 08:30 - 17:30 Friday 08:30 - 17:30

First Financial Brokerage House, 2 Enos Str. , fl. 4 & 5, Sofia (2026)

29/01/2024

Михаил Димитров, финансов анализатор в ПФБК, във "В развитие" 29.01.2024 г.

02/11/2023

Q3’23 set a new profitability record for the Bulgarian banking system

Тhe Bulgarian banking system marked a consecutive record breaking profitability quarter, positively affected by the rising interest rates. Q3’23 net income skyrocketed 111.1% YoY to BGN 1bn, registering a new best quarter in history. The biggest contributor to growth was the 57.6% YoY increase (+BGN 472.1m) of net interest income following the BGN 639.6m growth of interest income and partly limited by the BGN 167.5m increase of interest cost. Non-interest income also grew by 19.5% YoY (+BGN 89.9m) as the lower gains on securities were surpassed by the positive dynamics in FX gains. Total operating income (TOI) rose 43.9% YoY (+BGN 562m). Below TOI line we notice decline of contributions to resolution funds and deposit guarantee schemes, lower net other expenses and more profound (+16.5% YoY, BGN 89.3m) increase of administrative cost. Credit provisioning also had positive effect by declining 50.5% YoY (-BGN 81.8m).

The YtD numbers reveal 80.5% YoY (+BGN 1.2bn) growth of net income to BGN 2.7bn, already higher than the whole 2022 net income. The 56.1% YoY (BGN 1.3bn) growth of net interest income was the main reason for the improved financials. The growth of interest income was mainly from credit institutions (+11-fold, +BGN 713.2m) and non-financial corporates (+69%, +BGN 620.9m). Interest income on bonds portfolio also grew notably by 85% YoY (+BGN 155.6m). In the non-interest income lines the dynamics were similar to Q3 alone with FX gains offsetting the lower gains on securities. The higher administrative cost partly reduced profitability while lower provisioning had the opposite effect on bottom line.

12-m trailing ROE of the banking system continued improving for an eleventh consecutive quarter to 18.5% from 12.4% at end of 2022. The breakdown by banks reveals that DSK bank and Unicredit Bulbank booked more than half of 9m’23 profit, respectively BGN 744m and 645.8m, followed by UBB with BGN 354.9m and Eurobank Bulgaria with BGN 239.2m net income while only one bank branch closed the commented period with a net loss.

Total assets of the banking system grew by 10.9% YoY to BGN 165.1bn, as the growth came mainly from the net loan portfolio (+13.5% YoY, +BGN 10.9bn) as well as cash and receivables from credit institutions (+48.9% YoY, +BGN 4.4bn). After the merger of UBB with Raiffeisenbank Bulgaria, UBB is the market leader by assets for second consecutive quarter with 19.71% (+0.23 p.p. QoQ) share followed by DSK bank with 18.82% (-0.16 p.p. QoQ), Unicredit Bulbank with 18.67% (+0.08 p.p. QoQ), Eurobank Bulgaria (11.11%, +0.07 p.p. QoQ) and Fibank (7.99%, -0.12 p.p. QoQ).

Gross loans and advances increased by 12.7% YoY as the growth was across all segments - corporate loans (+7.9% YoY, +BGN 3.5bn), mortgage loans (+17.8% YoY, +BGN 3.1bn), consumer loans (+10% YoY, +BGN 1.6bn) and other financial institutions (+34.5% YoY, +BGN 2.4bn).

Loan portfolio quality continued improving as the 90-days overdue loans ratio declined for a sixteenth consecutive quarter to 2.71% compared to 3.18% at end-2022, while NPE ratio declined to 4.36% (3.81% of total loans and advances) from 5.17% at end-2022.

Source: BNB; FFBH

02/08/2023

The banking system with a new profitability record quarter in Q2’23 benefiting from increasing interest rates

Q2’23 net income of the Bulgarian banking system surged 101.6% YoY to BGN 905m, marking the best quarter in history. The biggest contributor to growth was the 62.6% YoY increase (+BGN 463.6m) of net interest income following the 76.3% growth (+BGN 637.5m) of interest income and the 3-fold (+BGN 173.8m) growth of interest cost. Non-interest income came virtually flat as the lower gains on securities were fully offset by the positive dynamics in FX gains. Total operating income (TOI) rose 38.1% YoY (+BGN 469.4m). Below TOI line we notice decline of contributions to resolution funds and deposit guarantee schemes and lower net other expenses which completely exceeded the higher administrative cost.

H1’23 net income increased 66% YoY to BGN 1.7bn mainly on the growth of net interest income (+55.3% YoY, +BGN 808.5m). The growth of interest income was mainly from credit institutions (+17-fold, +BGN 499m) and non-financial corporates (+59%, +BGN 358.3m). Interest income on bonds portfolio also grew 80% YoY (+BGN 95.1m). Below the TOI line the dynamics were similar to Q2 with FX gains offsetting the lower gains on securities while higher administrative cost and contributions to resolution funds and deposit guarantee schemes partly reduced profitability. 12-m trailing ROE of the banking system continued improving for a tenth consecutive quarter to 16% from 12.4% at end of 2022. The breakdown by banks reveals that DSK bank and Unicredit Bulbank booked the main chunk of H1’23 profit, respectively BGN 447.8m and 450.2m while only one bank branch closed H1 with a net loss.

Total assets of the banking system grew by 13.4% YoY to BGN 161.1bn, as the growth came mainly from the net loan portfolio (+14.1% YoY, +BGN 10.9bn) as well as cash and receivables from credit institutions. After the merger of UBB with Raiffeisenbank Bulgaria there is a new leader on the market with 19.48% share of assets followed by DSK bank with 1 8.98% (+0.04 p.p. QoQ), Unicredit Bulbank with 18.59% (-0.34 p.p. QoQ), Eurobank Bulgaria (11.04%, +0.46 p.p. QoQ) and Fibank (8.10%, +0.05 p.p. QoQ).

Gross loans and advances increased by 13.3% YoY as the growth was across all segments - corporate loans (+9.2% YoY, +BGN 3.9bn), mortgage loans (+17.4% YoY, +BGN 3bn), consumer loans (+10.9% YoY, +BGN 1.7bn) and other financial institutions (+37.7% YoY, +BGN 2.1bn).

Loan portfolio quality continued improving as the 90-days overdue loans ratio declined for a fifteenth consecutive quarter to 2.77% compared to 3.18% at end-2022, while NPE ratio declined to 4.47% (3.80% of total loans and advances) from 5.17% at end-2022.

20/06/2022

Bulgaria Weekly Update

All main indexes finished on red territory last week, as world stocks on Friday closed out their steepest weekly slide since the pandemic drop of March 2020. Investors deepened worries that tighter monetary policy by inflation-fighting central banks could damage the global economic growth. The leading local index SOFIX (612.79) decreased the most by 1.2%, followed by the broad indexes BGBX40 (143.38) and BGTR30 (735.32) with 0.9% and 0.4% falls, respectively. BGREIT (178.76) slipped 0.3% and completed the lossers‘ list. The overall liquidity remained poor and the weekly turnover dropped by 39% compared to the YtD average. The volumes also recorded a sharp fall by 43% compared to average weekly numbers from the beginning of the year. 12 out of 29 names in our watchlist finished on the negative side with Chimimport (CHIM, BGN 0.92, -5.9%), M+S Hidraulic (MSH, BGN 8.75, -5.4%) and Stara Planina Hold (SPH, BGN 9.70, -4.9%) leading the laggards. On the opposite side remained 10 out of 29 companies, led by Agria Group Holding (AGH, BGN 31.60, +10.1%) Korado Bulgaria (KBG, BGN 7.05, +4.4%) and Industrial Capital Holding (HIKA, BGN 3.60,+3.4% ).

• Bulgaria’s 4-mo trade gap widened to BGN 3.9bn
• Construction production index decreased 0.6% MoM in April’22
• Industrial production decreased 0.5% MoM in Apr’22
• Overnight stays surged 114.6% YoY in Apr‘22
• Retail trade decreased 0.8% MoM in April’22
• HICP accelerated by 1.3% MoM in May'22
• Unemployment rate fell to 4.5% in May’22
• Bulgaria's new passenger car registrations up 35.2% YoY in May 2022
• 4-mo current account deficit narrowed to EUR 626.8m
• Monbat approved BGN 0.14 DPS for 2021
• Advance Terrafund bought 1 115 daa in May’22
• EMKA approved BGN 0.1579 gross DPS for 2021
• Telelink Business Services EAD distributed BGN 10.4m dividend towards Telelink Business Services Group
• Sopharma Properties approved 2021 DPS of BGN 0.166
• Elana Agrocredit’s YtD new leases increased 246.7% YoY in May’22

13/06/2022

Bulgaria weekly update

All main indexes advanced modestly last week with the exception of BGREIT(179.22, -0.7%) despite the global shares sell-off on Friday, largely tied to investors’ worries over inflation, rising interest rates and the likelihood of a recession. The leading local index SOFIX (620.06) increased by 0.7%, followed by the broad BGBX40 (144.69) and BGTR30 (738.44) with 0.6% and 0.5% rises respectively. Total turnover showed satisfactory performance and reached BGN 25.5 m., exceeding the YTD average by 39%. 13 out of 29 names in our list of selected companies finished on green territory last week and the same number of companies weighed on the downside. Sirma Group Holding (SGH, BGN 0.81, +8.8%), Industrial Holding Bulgaria (IHB, BGN 3.48, +8.7%) and Bulgarian Real Estate Fund (BREF, BGN 2.36, +8.3%) led the gainers list. On the negative side remained Advance Terrafund (ATER, BGN 2.88, -4.0%), First Investment Bank (FIB, BGN 2.00, -3.8%) and Korado Bulgaria (KBG, BGN 6.75, -3.6%).

• Bulgaria’s Q1’22 GDP up by 0.8% QoQ and 4.0% YoY
• OECD lowered Bulgaria’s 2022 GDP growth forecast to 2.5%
• Sopharma’s May'22 sales increased 16% YoY
• BREF signed a new lease for Kambanite
• Webit Investment Network’s IPO oversubscribed 2.4 times
• Trace in partnership with SC CONI SRL signed BGN 495m construction contract in Romania
• Moldindconbank‘s shareholders to vote on no dividend distribution
• Sopharma filed a mandatory tender offer at BGN 8.20 per share for Sopharma Properties
• Gradus AD to receive BGN 7m as dividend from four of its subsidiaries
• Sirma plans to implement a dividend policy
• Gas prices decrease by 12.8% in June
• Monbat to collaborate with ABC in bipolar lead batteries project
• Sirma Group Holding sold 499.6k own shares; became the sole owner of Sirma Solutions; plans to invest up to BGN 50m in acquisitions by 2026
• Biodit signed BGN 700k contract
• Sopharma to buy back 224k shares on June 13

06/06/2022

Bulgaria Weekly Update

SOFIX(615.66) increased modestly by 0.3% last week, while the other indices – BGBX40 (143.78), BGTR30 (734.96) and BGREIT(180.49) underperformed by 1.3%, 0.4% and 0.2%, respectively. The investors sent another week where the bearish factors such as inflation, slowing economic growth and the war in Ukraine were balanced by the accommodative central bank`s monetary policy. Total turnover remained close to the average YTD , reaching satisfactory BGN 16.5 mln. 11 out of 29 names in our watchlist finished on positive side as Sopharma Trading (SFT, BGN 5.00, +10.1%), Sirma Group Holding (SGH, BGN 0.74, +5.7%) and Doverie United Holding (DUH, BGN 7.94, +4.5%) led the gainers. On the opposite side remained Advance Terrafund (ATER, BGN 3.00, -14.00%) and Industrial Holding Bulgaria (IHB, BGN 3.20, -10.6%) leading the laggards.

• Bulgaria end-April 2022 budget with BGN 882.5m surplus
• Bulgaria’s business sentiment index fell 0.7% MoM in May’22
• Producer prices added 3.3% MoM in April‘22
• Bulgaria‘s gross external debt increased 6.4% YoY to EUR 41.5bn in Mar’22
• Bulgaria to be exempt from EU ban on Russian oil imports until 2024 year-end
• According to the ECB, Bulgaria is not ready for euro adoption yet
• BNB expects inflationary pressure to persist in Q2’22 and Q3’22
• Fibank calls bondholders meetings to vote on change of call option dates
• Sirma Solutions acquires 517k shares in parent holding
• Sirma Group Holding plans to acquire local IT-company TBI Info
• Sopharma to buy back 200k shares on June 6

01/06/2022

Market Wrap-up
All main indexes finished on red territory last week as only the broad BGTR30 (737.01) moved North and gained modestly 0.4%. The main index SOFIX (613.62) decreased by 0.8%, followed by 0.4% fall of both BGBX40 (145.73) and BGREIT (180.91). Despite the negative weekly performance, the indices registered some improvement on Thursday and Friday on hopes of an eventual slowdown in U.S. monetary tightening later this year and end of the lockdowns in Shanghai. For a first time in a while the total turnover showed impressive performance, ending the week almost 103% higher than the average number from the beginning of the year. 12 out of 29 names in our list of selected companies finished the week on green territory as Alcomet (ALCM, BGN 8.50, +13.3%), Telelink Business Services (TBS, BGN 13.50, +6.3%) and Doverie United Holding (DUH, BGN 7.60, +5.6%) led the gainers list. On the negative side remained 11 out of 29 companies, as Speedy (SPDY, BGN 105.00, -6.3%), Allterco (A4L, BGN 17.90, -4.5%) and Sirma Group Holding (SGH, BGN 0.70, -4.1%) were the top losers within our universe.
News Highlights
• Investment funds’ AuM at BGN 8.7bn in end-Q1 2022, up 34.4% YoY
• Net assets of Bulgarian pension funds declined 1.7% QoQ in Q1’22 on negative returns in the quarter
• S&P confirmed Bulgaria’s credit rating at BBB with Stable Outlook
• Stara Planina’s Apr’22 sales jumped 23.8% YoY; expectations for May’22 are for 60% YoY increase
• Speedy proposed BGN 4.00 gross DPS for 2021
• Stara Planina to distribute BGN 0.298 gross DPS
• Monbat to sell Monbat Holding GmbH for EUR 36m, significant upside to book value
• Dronamics Global received an operational license for the Black Swan drone
• Telelink to start a buyback for up to 42k shares
• Eleven Capital called AGM on June 30 to vote on BGN 0.40 gross DPS for 2021
• BREF proposed DPS of 0.0483 for 2021

First Financial Brokerage House

29/01/2024

02/11/2023

02/08/2023

20/06/2022

13/06/2022

06/06/2022

01/06/2022

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Monday	08:30 - 17:30
Tuesday	08:30 - 17:30
Wednesday	08:30 - 17:30
Thursday	08:30 - 17:30
Friday	08:30 - 17:30