Overdue housing loans have ballooned by 37.5 per cent on the month in June 2009, outpacing all other segments, according to the latest Bulgarian National Bank (BNB) figures.

Bad and restructured corporate loans spiralled by a second-fastest 30.5 per cent and the consumer segment recorded an 18.7 per cent increase.

Home loans saw the most defaults also in all of the past six months but for February, when they ceded the top position to business loans with a 33 per cent rise month-on-month.

Bad and restructured loans added up to 1.258 billion leva in the business segment, 549.7 million leva in the consumer segment and 386 million leva in the housing segment. Defaults on other types of loans totalled 98.2 million leva.

Bad and restructured loans accounted for 4.6 per cent of the total portfolio of the Bulgarian banking system but the rising share comes against the backdrop of slowing lending activity.

Thus, bad and restructured loans made up 2.2 per cent of all in June 2008 but the 59.7 per cent growth seen back then has now decelerated to 11.8 per cent.

A further factor is the increased capital of the banking system, which serves as an extra buffer against a possible deterioration in loan portfolios.

In May the capital topped 8.7 billion leva, having surged by more than 1.1 billion leva over the nine months through May 2009. It was backed by banks’ decision to retain profits in a bid to mitigate the effects of the downturn.

Total bad and restructured loans at the end of the first half reached 2.292 billion leva.