The Bulgarian National Bank (BNB) maintained the countercyclical capital buffer rate applicable to credit risk exposures in Bulgaria at 2.0% as of Q2’24, the same as in Q1’24 and Q4’23 and compared to 1.5% currently. The credit-to-GDP ratio amounts to 81.6% at the end of Q2’23. Its deviation from the long-term trend is negative (-30.4 p.p.), which corresponds to zero value of the reference indicator for the countercyclical buffer. The regulator also took into account additional indicators, focused on the credit market, the indebtedness, the real estate market and the general economic environment. The bank regulator noted that lending activity has remained elevated, in particular in the segment of loans to households, and the credit risk is still elevated in a short run. Thus, “in view of the volatile energy prices, the risks of supply-chain disruptions and the expected slowdown in foreign demand, debt servicing capacity could weaken, leading to an increase of non-performing loans and impairments. Moreover, the trend of rising interest rates may affect the financial position of borrowers. Therefore, credit institutions should adhere to conservative policies with regard to lending, apply timely and adequate provisioning, and plan their capital trajectories taking into account the likelihood of an aggravation of risks or a potential emergence of additional unfavourable developments in the economic outlook”, the BNB announced.