Page 79 - SE Outlook Regions 2022

ratio as of end-September amounted to 163.0%, way above the
minimum regulatory requirement of 100%.

Gross loans and advances in October increased by 5.5% y/y to
BGN88.6bn, mainly thanks to the claims on credit institutions, which
grew by 37.4% y/y to BGN14.0bn.

Compared to end-September, the banking system's gross loan portfolio
reported a growth 1.1% y/y to BGN74.5bn. Claims on non-financial
corporations increased by 1.5% y/y, while those on households moved
up by 1.1% y/y. Loans to other financial corporations and to the general
governments sector decreased by 0.6% y/y and 1.4% y/y, respectively.

The deposits in the banking system increased by 0.6% y/y to
BGN114.0bn. Deposits of households increased by 0.8% y/y, while
those of credit institutions moved up by 7.7% y/y.

The banks' total assets increased to BGN133.6bn at the end of
October, up by 0.7% y/y.

3.3.3 Industry

Bulgaria’s industry was affected by the coronavirus pandemic in 2020
but started recovering in 2021. However, some industries have been
plunged into a fresh crisis by the hike in energy prices. They include
arms manufacturer Arsenal, which has shut down production from
January 17 to February 11.

Bulgaria is a producer of metals including lead, zinc and copper. Among
the internationally listed mining companies active in Bulgaria, Dundee
Precious Metals reported strong results for gold and copper production
in 2021, while Velocity reported positive drill results from its Rozino gold
project.

3.3.4 Energy & power

Bulgaria’s energy sector will need deep reforms so that the country can
meet the EU green goals. In its Recovery and Resilience Plan, Bulgaria
aims to close its coal industry by 2038 or 2040. However, this would
pose challenges to the country as nearly 40% of the energy in Bulgaria
is produced by coal-fired power plants with more than 95% of the fuel
being lignite. The biggest coal-fired power plant is the state-owned
Maritsa East 2 with capacity of 1.61 GW of the total 3.85 GW capacity
of all coal-fired power plants.

On the other hand, 38% of the €6.6bn Bulgaria should receive under
the Recovery and Resilience Plan would be used for the transition from
coal to green energy.

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