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August 25, 2011updated 12 Apr 2017 4:12pm

Bulgarian leasing shrinks despite new business

The number of new leasing contracts signed in Bulgaria has increased despite the leasing market contracting as percentage of the GDP during the same period last year, recent data by the Bulgarian National Bank has revealed

By Elza Holmstedt-Pell

The total portfolio value of Bulgarian leasing companies stood at BGN 3.831bn (€1.959bn) at the end of June 2011, showing a significant drop from the value of 4.448bn (€2.274bn) recorded at the end of 2010’s second quarter.

Total portfolio value also declined as a percentage of Bulgaria’s overall GDP, from 6.3% at the halfway point of 2010 to just 5% of the market at the end of H1 2011.

Since the end of March 2011, national book value decreased by 2.1% (BGN 80.7 million, €41.3m).

However, the amount of new financial lease agreements concluded during the second quarter of 2011 amounted to BGN 286.9m (€146.7m), showing an increase of 43.6% in comparison with the same period of 2010.

Compared to the first quarter of 2011, new business volume increased by 17.7% (BGN 43.1million, €22.1m)

Dimitar Karakitukov, vendor manager at Deutsche Leasing Bulgaria, said he believes one reason behind the contraction slowing down is that farmers have new incentive to use leasing, after a government subsidy programme that required farmers to own their assets to benefit from it was stopped earlier this year.

Karakitukov is positive about the future of Bulgarian leasing: “Bad times have passed, I think.”

He expects the agriculture, food and transport and logistics sectors to grow during the rest of this year.

The transport sector has already expanded, by about 1% compared to the same period last year, making the only sector apart from real estate to display growth.

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