The banking system in Bulgaria in 2025 – main highlights

In 2025, Bulgarian economy continued to grow, performing significantly above the EU and eurozone averages. Inflation remained above the EU and eurozone averages, with the pro-inflationary environment driven predominantly by domestic structural factors, with the leading role being played by increased unit labor costs and significant growth in private consumption, which allowed the increased costs along the supply chain to be passed on to final prices. The stronger performance of the economy, increased consumption and growth in disposable income also had a positive impact on the results and activities of the banking sector.

The past year was characterized by high credit activity due to the continued impact of factors on both of the credit demand and supply. Credit demand is supported by low interest rates and the growth in disposable income of economic agents, while supply is stimulated by the high liquidity of the banking system, the stable capital position and increased competition between banks.

As of December 31, 2025, 23 banks were operating in Bulgaria, six of which were branches of foreign banks. The total assets of the banking system increased by 18.5% to BGN 227.04 billion (EUR 116.08 billion) compared to 2024.

Source: BNB

The share of loans and advances in total assets increased from 61.2% to 62.3% at the end of December 2025. The share of cash decreased to 17.6% from 17.8%, and that of the securities portfolio decreased from 17.3% to 16.5%.

Deposits attracted by banks continued to grow. The main driver of the growth was the deposit of BGN amounts due to the euro adoption, as well as the increase in disposable income. At the end of December 2025, the total amount of deposits in the banking system reached BGN163.49 billion (EUR 83.59 billion) (74.0% of the estimated GDP), recording an annual growth of 16.4%. Confidence in the banking system remains stable against the backdrop of a high propensity to save by households, having about two-thirds of deposits in the banking system (58.3% at the end of December 2025).

In 2025, the banking sector continues to maintain a solid capital position, maintaining capital adequacy and liquidity coverage ratios significantly above the regulatory requirements at the systemic and local levels, as well as the average level for European banks.

At the end of 2025, the Common Equity Tier 1 (CET 1) ratio for the entire banking system was 24.89%, and the total capital adequacy ratio was 26.56%. The capital adequacy ratios of banks in Bulgaria are above the average levels for the European banks, which, according to the ECB data, at the end of the third quarter of 2024 are 15.72% for CET 1 and 19.81% for total capital adequacy.

The liquidity coverage ratio (LCR) is 280.6% compared to 241.0% at the end of 2024. According to the ECB data at the end of December 2025, the liquidity coverage ratio for the banks participating in the Single Supervisory Mechanism amounted to 158.60%.

The five largest banks according to the classification of the Banking Supervision Department of the BNB (the so-called first group of banks) form 76.3% of the total assets in the banking system, slightly decreasing compared to their level of 76.8% at the end of 2024. As of December 31, 2025, the market share of banks in the second group increased to 21.3% compared to the level of 20.7% at the end of 2024, and those of the third group, which includes branches of foreign banks, is at a level of 2.4%.

Source: BNB, own calculations

The share of non-performing loans continues to decline in 2025. As of December 31, 2025, the volume of non-performing loans (overdue by more than 90 days; excluding central banks and credit institutions) increased to BGN 2.25 billion ( EUR 1.15 billion), but decreased to 1.55% as a share, compared to 1.79 at the end of 2024.

At the end of 2025, the coverage ratio of gross non-performing loans and advances in the Bulgarian banking system was at the level of 86.0%. According to the latest EBA data, the coverage ratio for the European banks was 41.90% at the end of the third quarter of 2025.

In 2025, despite the ongoing economic challenges and the dynamic international environment, including geopolitical tensions in the vicinity of Bulgaria, the banking sector in the country maintained its stability and resilience. The sector continues to maintain solid capital adequacy and high levels of liquidity, which creates a stable basis for meeting external and internal risks.

Among the main trends in 2025, the increased digital transformation and the accelerated implementation of innovative technological solutions in banking products and services stand out, especially in the field of electronic and instant payments. Banks are actively investing in cybersecurity, process automation and improving the customer experience through mobile and online platforms.

A significant emphasis in 2025 remains the preparation of the banking system for the euro area adherence, including adapting the internal systems, regulatory framework and communication strategies with the customers.

The net interest income of banks increases by 1.3% on an annual basis (with a growth of 14.7% on an annual basis at the end of 2024) and as of December 2025 amounts to BGN 5.64 billion (EUR 2.88 billion) against the backdrop of increased lending activity during the year. At the end of 2025, net income from fees and commissions increased by 10.1% year-on-year (compared to a growth of 9.9% at the end of 2024) to BGN 1.783 billion (EUR 911.8 million). As of December 31, 2025, the net profit of the banking system amounted to BGN 3.628 billion (EUR 1.855 billion) compared to BGN 3.695 billion (EUR 1.889 billion) a year earlier.

In 2025, Bulgarian economy developed in conditions of weaker external demand, moderate price increases and a gradual decrease in the interest rates in the Eurozone. However, private consumption continues to grow, supported by a stable labor market, higher consumer confidence and active lending, which is a key to the banking sector’s performance and results. Despite the increased lending activity in 2025, the banking sector profit remained lower than the previous year. At the same time, higher impairment charges and a more uncertain external economic environment put additional pressure on the banking system, making risk management and maintaining a sound capital position key to the sustainability of the sector.

Source: BNB, own calculations

As of December 31, 2025, the level of the return on assets (ROA) indicator decreased to 1.8%, compared to 2.1% as of December 31, 2024. The return on equity (ROE) decreased to 14.5% from 17.3% for the same period.

Source: BNB, own calculations

In the past year, there was a gradual decrease in the average interest rates on newly agreed deposits. The average interest rate on deposits with agreed maturity for households in BGN decreased by 22 basis points from 1.07% at the end of 2024 to 0.85%. For deposits in EUR, a decrease of 25 basis points from 1.49% to 1.24% was recorded. The average interest rate on newly agreed deposits with agreed maturity for non-financial corporations decreased from 2.46% to 1.45% for deposits in BGN and decreased from 2.03% to 1.43% for those in EUR.

Source: BNB

As of the end of December 2025, the annual percentage rate of charge (APR), which includes all fees and commissions related to the loan in addition to the interest, increased from 2.82% at the end of 2024 to 2.90% for housing loans in BGN and decreased from 2.87% to 2.47% for those in EUR. The APR level for consumer loans in BGN is 9.76% and 4.61% for those in EUR (from 10.68% and 4.58%, respectively, at the end of the last year). The average interest rates on newly granted loans to non-financial corporations decreased from 4.47% to 4.09% for those in BGN, and for those in EUR they decreased from 5.01% to 4.60%.

Source: BNB

The impact of a number of regulations and regulatory requirements also have an impact on the performance of the banking sector.

In 2025, the main activity of the banking sector in Bulgaria was focused on preparing for the adoption of the euro and the country’s accession to the euro area. Banking institutions worked on adapting their information systems, accounting and payment processes, as well as ensuring readiness for dual pricing and a smooth conversion from lev to euro. Significant efforts were also directed to coordination with the Bulgarian National Bank, European institutions and other participants in the financial sector in order to ensure the stability of the banking system and smooth transition to the new currency.

In 2025 six banks were designated by the BNB as domestic systemically important banks (O-SIIs), with O-SIIs buffer levels in the range of 0.50%-1%. As of January 1, 2025, the countercyclical capital buffer remained at 2%, after being increased by the BNB as of October 1, 2023. These changes had an impact on the capital indicators of the banking sector over the past year.