Financial news

Rising profits, high capital buffers and stable funding will continue to support the outlook for Bulgarian banks, Moody's Investors Service said. However, asset risk, stemming primarily from corporate lending and the slow nonperforming loans (NPL) resolution processes, remains high, the ratings agency said. "Bulgarian banks' profitability has been rising from a low base, and we expect further earnings growth ahead, though at a slower pace," Constantinos Kypreos, senior vice president at Moody's said in the release which summarises the conclusions of a report of Moody's on the Bulgarian banking system outlook. Kypreos added that "increased business opportunities and credit growth will support both interest and non-interest income." The Bulgarian banking sector's net profit rose 41% in 2016 to BGN 1.3 billion, equivalent to a return on equity of 10.4%, as lower loan-loss provisions and tighter cost control supported earnings growth and organic capital generation.

Deposits by the non-government sector in Bulgarian banks rose to BGN 68.5 billion by the end of June, up 5.6% year-on-year, the Bulgarian National Bank (BNB) said. In May, deposits with Bulgarian banks rose by an annual 7.6%. Corporate deposits by the non-financial sector grew by an annual 9.7% to BGN 19.63 billion at the end of June, after increasing by an annual 10.1% in May. Household deposits rose by 5.7% on the year to BGN 45.8 billion in June, after increasing by 5.7% recorded at the end of May.

Companies

Bulgaria intends to launch a tender for the construction of a gas interconnection with Greece this autumn, energy minister Temenuzhka Petkova said. Meanwhile, Bulgaria also intends to launch a new gas market test this autumn. The construction of the interconnector Greece-Bulgaria is planned to start in 2018. The link providing for gas flow in both directions is expected to become operational in 2020. The project is being implemented according to the planned timeframe, Petkova said. Bulgaria will seek EUR 35 million in EU financing for the project. The project for connecting the gas transmission systems of Bulgaria and Greece is being implemented by joint venture company ICGB, registered in Bulgaria in 2011, with state-owned Bulgarian Energy Holding (BEH) and Greece-registered IGI Poseidon holding equal shares. Greek public gas corporation DEPA and Italian energy group Edison own 50% each of IGI Poseidon.

Bulgaria's government has shown interest in potential deliveries of natural gas from Israel to the planned gas hub Balkan - a project meant to diversify gas supply sources and routes in Southeast Europe. "Bulgaria has expressed interest in potential supplies of natural gas from Israeli gas deposits, which are estimated at up to 1,000 billion cubic metres and their extraction is planned to start in 2019," the Bulgarian government said in a statement.

Bulgarian diversified group Severcoop Gamza Holding said its Sofia-based subsidiary Imoti-S has acquired a 25.13% stake in local diversified holding company Ustrem for BGN 1 million. Imoti-S has acquired 1 million Ustrem Holding shares on July 24, Severcoop Gamza Holding said in a bourse filing. Sofia-based Ustrem Holding invests in metal products, agriculture and engineering. Imoti-S’ core activity is real estate investment and resale. The company has a registered capital of BGN 7.2 million, according to data from the country’s commercial register.

The fourth largest producer of sweets, Prestige-96 in Veliko Tarnovo, is growing by buying a factory. The company has acquired the assets of waffles producer DIK-2000 for BGN 4.2 million. The company’s goal is to increase its production capacity for the Middle East markets. Prestige acquires pure assets: new plant and production lines. The transaction was made through the creation of a new company, Credo food, in which the assets of DIK-2000 were added. The total estimate of the land, plant and machinery that is included in the new Credo Food company is estimated at BGN 4.2 million, which is the price of the Prestige-96 deal. The company was founded in 2000 and produces waffles under the Credo brand, which are mainly exported. The in-kind contribution includes the brands and the industrial design of the company, estimated at BGN 228 thousand. The machines and equipment of the company, which are also included in the contribution, are estimated at BGN 805 thousand. According to unofficial information, Prestige plans to export production from the new factory for BGN 7-8 million next year.

The Bulgarian Energy Holding (BEH) said that coal mining company Mini Maritsa Iztok is seeking a BGN 20 million loan in the form of overdraft, to be used for current payments to suppliers, employees and the state. The loan is to be divided into two lots - of BGN 12 million and BGN 8 million, respectively. The mining company will use the BGN 12 million portion to cover employee-related costs, while the BGN 8 million portion will cover payments to suppliers. Loan offers should be submitted by August 7. In May, Mini Maritsa Iztok said its net profit rose to BGN 37 million in the first quarter of 2017, compared to BGN 10.7 million in the like period of last year. BEH pools state-owned energy assets.

Bulgarian financial leasing company Elana Agrocredit said its shareholders have authorized the board of directors to increase capital by up to BGN 100 million within the next 5 years. The company shareholders have approved the proposal at a general meeting held on June 30. The company’s capital currently stands at BGN 18.9 million. Elana Agrocredit’s net profit rose to BGN 1.05 million in the first half of 2017, compared to BGN 868,000 in the like period of last year. Revenues rose to BGN 1.8 million in the January-June period from BGN 1.3 million in the corresponding period of 2016. Earlier this month, Elana Agrocredit said it plans to issue a EUR 7 million 63-month bond with an annual coupon of 3.2%.

Europe

European Commission preparations to retaliate against proposed new U.S. sanctions on Russia that could affect European firms are likely to face resistance within a bloc divided on how to deal with Moscow, diplomats, officials and experts say. A bill agreed by U.S. Senate and House leaders foresees fines for companies aiding Russia to build energy export pipelines. EU firms involved in Nord Stream 2, a EUR 9.5 billion project to carry Russian gas across the Baltic, are likely to be affected. Both the European Union and the United States imposed broad economic sanctions on Russia's financial, defense and energy sectors in response to Moscow's annexation of Crimea from Ukraine in 2014 and its direct support for separatists in eastern Ukraine. But northern EU states in particular have sought to shield the supplies of Russian gas that they rely on. Markus Beyrer, director of the EU's main business lobby, Business Europe, urged Washington to "avoid unilateral actions that would mainly hit the EU, its citizens and its companies".

America

Wall Street’s tortoise just passed the hare. Morgan Stanley, which moved to a more safe-and-steady approach after the financial crisis, on Monday surpassed its more freewheeling rival, Goldman Sachs Group, in market value. Run by Chairman and CEO James Gorman, Morgan Stanley became the more valuable firm after its shares rose 0.3% and Goldman’s dipped 1% Monday. Morgan Stanley’s closing price of $46.71 Monday, its highest since March, implies a market cap of $86.40 billion, according to FactSet. Goldman closed at $218.18 giving it a market value of $85.88 billion. That gap, now about $500 million in Morgan Stanley’s favor, was as wide as $53 billion for Goldman in 2009, according to FactSet. Goldman, run by Chairman and CEO Lloyd Blankfein, performed well in the wake of financial crisis. More recently the Wall Street firm’s business has suffered as volatility wanes and tighter regulations make trading securities and derivatives contracts with clients less profitable.

Asia

Nothing is easy for Iran's economy these days, and things could soon get even tougher. The U.S. House of Representatives is expected to pass a bill Tuesday to put new sanctions on Russia, North Korea — and Iran. A Senate version passed overwhelmingly last month. Iran is being targeted for its activities in Syria, its ballistic missile program and other "destabilizing activities," according to the Senate's version of the legislation. Under the terms of the 2015 Iran Nuclear Deal, Tehran is not immune to new sanctions as punishment for activities outside of the country's nuclear program. Ramin Rabii, CEO of Turquoise Partners, Tehran's largest investment firm for foreign money, said "there is definitely some worry over new sanctions, especially of their impact on business with Europe and Asia." There are bright spots, however, for the Iranian economy: "One of President (Hassan) Rouhani's greatest achievements," said Rabii, "has been to lower inflation from 45 percent down to a much more manageable 10 percent." But that moderating inflation has caused another problem to surface.

Mister Senko (1905 - 1987)

Mister Senko is a Bulgarian illusionist. His real name is Evstati Hristov Karaijonchev. He was born on 12 February 1905 in Vratsa. Mr. Senko is the first Bulgarian to compete with Europe's biggest magicians. In 1939, in Berlin at the International Congress of the Art of Illusion, he first showed his crowning number, "Removing the Head". So he left the room with his head off. With this extraordinary number, he won second prize. With only one vote ahead the jury bestows the first place on the Austrian Kalanag - the then most popular magician in Europe. In 1961, he was named "Honorary Member of the French Academy of the Illusionists" in Paris. He was awarded the Robert Hood Order, elected as an honorary president of the Bulgarian Magic Club. He became an honorary citizen of Paris, Sofia and his hometown Vratza. Thanks to Mr. Senko Bulgaria becomes a member of the European and the World Organization of the Illusionists. Some of his most famous illusions are "The Electric Chair", "Cutting a Woman with a Circular Saw". For the number "Removing the Head" he was awarded the Special Prize of the American Association of the Illusionists in 1961 in Indianapolis. It was also showed in Hollywood in front of the stars of American cinema. Mister Senko was awarded the title "Hero of Socialist Work" and was awarded with the Georgi Dimitrov, People's Republic of Bulgaria - First Degree, Cyril and Methodius - first degree and other awards. He died at the age of 82 on July 26, 1987. (Photo: old.duma.bg)

On that day:  The Wonder Bridges near the village of Zabardo Devnya Springs